Swedish telecoms giant Ericsson has agreed a deal to acquire cloud-based communications specialist Vonage for $6.2bn (£4.63bn).
The cloud-based Vonage Communications Platform (VCP) serves more than one million registered developers globally via its API (Application Programming Interface) platform. US-based Vonage’s API helps different forms of digital software communicate with each other.
The deal, one of the largest in Ericsson's history, follows the company’s recent $1.1bn acquisition of Cradlepoint, which gave it access to tools that can connect devices using the so-called Internet of Things over a 4G or 5G network.
On completion of the all-cash transaction, Vonage will become a wholly owned subsidiary of Ericsson and will continue to operate under its existing name.
The deal marks the latest move by Ericsson into wireless enterprise where it has stated plans to “expand globally” by 2030. The new subsidiary company will especially focus on the Communication Platform as a Service (CPaaS) segment and look to accelerate enterprise digitalisation and developing advanced APIs made possible by 5G including telemedicine, immersive virtual education and autonomous vehicles.
Vonage chief executive Rory Read will join the executive team of Ericsson, reporting to CEO Börje Ekholm as part of the deal and said the combination of our two companies offers exciting opportunities for convergence of the cloud and powerful 5G networks [which] are forming the digital transformation and intelligent communications wave”.
Commenting on the acquisition, Ekholm said: “The acquisition of Vonage gives us a platform to help our customers monetise 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. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.
“Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way. Communication Service Providers will be able to better monetise 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 deal is expected to close in the first half of 2022 subject to Vonage shareholder approval and regulatory approvals.