Ericsson completes €6.2bn Vonage takeover

Ericsson has completed its €6.2 billion acquisition of cloud-based communication specialist Vonage in a move that will allow it to expand beyond telecoms and into enterprise services.

The deal was first agreed back in November but had been subject to an investigation by the Committee on Foreign Investment in the United States.

Now that the probe has concluded without any impediment, Ericsson has finalised the largest transaction in its history, building on the $1.1 billion takeover of edge networking firm Cradlepoint in 2020.

Ericsson Vonage

The Swedish telecoms equipment manufacturer believes there is an opportunity for it to diversify revenues and to add value by integrating its 5G technology into Vonage’s cloud-based communication tools and services.

Vonage offers cloud-based unified communications services to businesses but 80% of its annual $1.4 billion revenue comes from the Vonage Communications platform (VCP) which used is used by more than 120,000 businesses.

The VCP offers APIs that allow developers to embed high quality communications, whether its text, voice, or video, into their applications without the need to invest in infrastructure.

Ericsson believes it can bring cellular connectivity and other technologies to this platform, enhancing the power of the tools that Vonage offers and allowing telcos to benefit from their investments in 5G through new services.

In addition to increasing R&D spend, Ericsson plans to offer Vonage’s unified communications services to its operator partners as white label products, expanding their offerings and increasing revenues.

“In the future, network capabilities will be consumed and paid for through open network APIs, creating the opportunity for unparalleled innovation,” said Ericsson CEO Börje Ekholm. “We have already launched the first network API, Dynamic End-user Boost, based on existing 4G infrastructure … and we aim to launch the first 5G network APIs in the coming year.

“We will continue to create new, enhanced applications and services for enterprises, while driving continued innovation on Vonage’s UCaaS and CCaaS applications, helping businesses create new digital experiences for better communications, connections and engagement.”

The acquisition also strengthens Ericsson’s presence in the US, where it is a partner for the major operators, and has manufacturing and development operations.

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