Ericsson is to acquire cloud-based communication specialist Vonage for €6.2 billion in a move that will allow it to bring more of its 5G expertise into the enterprise market and expand its service portfolio for businesses.
The deal is the largest ever made by Ericsson and builds on the $1.1 billion takeover of edge networking firm Cradlepoint last year.
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 (CVP), which is used by 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.
“The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business,” said Börje Ekholm, Ericsson CEO.
“The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize 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.
“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. 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. Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”
The acquisition is expected to close in the first half of 2022.
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