Ericsson to pay $6.2bn for cloud services group Vonage

Swedish telecoms giant Ericsson is set to pay $6.2 billion in cash for cloud-based telecoms services group Vonage.

Vonage, founded in 2001 in New Jersey, provides cloud communications services, including unified communications platforms and VoIP (Voice over Internet Protocol) services.

The company’s sales reached $1.4 billion in the year ending 30 September.

This marks the largest ever acquisition by the Swedish company.

Ericsson is set to pay $21 per share, a premium of 28 per cent over the firm’s current share price.

The deal is expected to close in the first half of 2022, subject to shareholder and regulatory approval.

Vonage will continue to operate as a wholly owned subsidiary of Ericsson, with all its 2,200 employees set to continue in their current roles.

Vonage chief executive Rory Read, who joined the company from Dell in 2020, will become part of Ericsson’s executive leadership team.

The news comes after Nokia announced its entrance into the cloud-based SaaS space last week.

“Today network APIs are an established market for messaging, voice and video, but with a significant potential to capitalise on new 4G and 5G capabilities,” said Börje Ekholm, president and chief executive of Ericsson. “Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way.”

“This will allow them to develop new innovative global offerings. Communication service providers will be able to better monetize their investments in network infrastructure by creating new API driven revenues.”

He added: “Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”

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