Ericsson to acquire Vonage for $6.2B
This would be the telecom giant's largest acquisition ever
The Swedish telecom equipment giant Ericsson announced on November 22 that it has agreed to acquire US-based company Vonage for a substantial USD $6.2 billion.
Pending regulatory approvals (expected in the first half of 2022), this would be Ericsson’s biggest acquisition ever.
Vonage is a B2C VoIP pioneer (you might remember their somewhat awkward TV commercials in the early 2000s), however over time the company has increasingly moved into business communication services. As of late, the company is branding itself as a “cloud communications” provider; given the rapid pace of digital transformation efforts (in part due to the COVID-19 pandemic), … this is a crowded field to say the least.
So what’s behind the deal? It could be interpreted as a revenue growth strategy. Vonage is by no means a major player in that specific software area (USD $1.25 billion in total revenue in 2020) yet further expansion can be anticipated. For a legacy telco like Ericsson, which faces a very complex regulatory environment internationally, the acquisition of a “cloud” company can bring a ray of comfort.