From Wall Street's perspective it is all about share price. Ericsson's shares have lost almost half their value in the last two years. The company also reported a loss of $1.45 billion in the first quarter, forcing a strategy rethink by new CEO Borje Ekholm who will refocus the group on core network equipment sales.
Leif Johansson, 65, has been chairman since 2011. With the turnaround strategy in place and recent changes in ownership, it was time to step aside, he said.
"It is natural to let the owners jointly propose a chairman and well ahead of this I want to announce that I will not be available for a next term," he said in a statement.
Ericsson, once the dominant force in mobile networks, has seen its position eroded by competition from nimbler, cheaper Chinese gear makers including Huawei and a resurgent Nokia and has tried to expand its business model to include clients in the energy, transport and media sectors.
A string of acquisitions has failed to boost profits and Ekholm is now looking at slimming down the group.