Ericsson revealed it would book a non-cash impairment of SEK11.4 billion ($1.1 billion) in its upcoming Q2 results mostly related to the Vonage cloud business it acquired in 2022, a charge which comes nine months after it took a hit of $2.9 billion on the value of the unit.
The vendor noted the latest charge on Vonage intangible assets reflected lower anticipated market growth in some of the division’s current portfolio. It will be booked in results scheduled to be announced next week.
In a statement Vonage CEO and Ericsson head of business area Global Communications Platform Niklas Heuveldop explained: “Given deterioration in the market environment and elective decisions we have made to refocus our investments in strategically prioritised areas, we have reassessed certain growth assumptions, resulting in a non-cash impairment.”
Despite this second sizeable write-down attributed to the unit within a year, Ericsson is standing by its strategy to “build a new source of monetisation for the telecom industry,” with Vonage bought as a key strand to this.
“Vonage is positioned at the centre of digitalising enterprises and society through the development of the Global Network Platform for network APIs,” the company added, noting its platform had already inked 12 service provider partnerships.
Ericsson completed the purchase of Vonage in 2022 for $6.2 billion. Last year’s impairment of $2.9 billion was attributed to “the significant drop in the market capitalisation of Vonage’s publicly traded peers, increased interest rates and overall slowdown in Vonage’s core markets”.
Comments