Ericsson moved to boost its wireless offerings for enterprises and developers through a deal to buy US-based cloud communications provider Vonage for $6.2 billion, the Swedish network giant’s biggest ever acquisition.
The vendor acquired Cradlepoint for $1 billion in 2020, which gave it access to tools which can connect devices using the so-called IoT over a 4G or 5G network.
Ericsson explained the Vonage deal aligned with a strategy to expand its portfolio and tap a communication platform as a service (CPaaS) segment it believes will grow significantly with increased investments in 4G and 5G, alongside a rise of new applications and use cases using the technologies.
“Vonage gives us a platform to help our customers monetise the investments in the network, benefitting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers”, Ericsson CEO Borje Ekholm commented in a company statement.
Ekholm emphasised innovative offerings unlocked by the acquisition could create new API-driven revenue streams for operators.
Ericsson stated enterprise digitalisation could be accelerated with the development of 5G APIs for telemedicine, virtual education, autonomous vehicles, gaming, and AR and XR.
It noted Vonage’s Communications Platform serves more than 120,000 customers and more than 1 million developers, enabling them to embed messaging, voice and video features into applications and products without back end infrastructure or interfaces.
Vonage was a pioneer of early internet telephony (VoIP) services. It had sales of $1.4 billion in the year to end-September and recently tried to sell its legacy consumer business but abandoned the sale in February.
Ericsson predicted the transaction will bring revenue synergies of $400 million by 2025 and “some cost efficiencies”.
If approved by regulators and Vonage’s shareholders, the deal is set to close in H1 2022.
After completion, Vonage will be reported as a separate segment in Ericsson’s financials and its CEO Rory Read will join the vendor’s executive team.Subscribe to our daily newsletter Back