Ericsson has completed the €6.2 billion acquisition of cloud communications company Vonage in a move that will allow it to expand beyond communications and into enterprise services.
The deal was first approved in November but has been the subject of an investigation by the US Committee on Foreign Investment.
Now that the investigation has ended without hindrance, Ericsson has completed the largest deal in its history, based on its $1.1 billion acquisition of Cradlepoint Advanced Networking in 2020.
The Swedish telecoms equipment maker believes there is an opportunity for it to diversify revenue and add value by integrating 5G technology into Vonage’s cloud communication tools and services.
Vonage provides unified cloud-based communications services to businesses but 80% of its $1.4 billion annual revenue comes from the Vonage Communications platform (VCP) used by more than 120,000 companies.
VCP provides APIs that allow developers to embed high-quality communications, whether text, voice, or video, into their applications without having to invest in infrastructure.
Ericsson believes it can bring cellular and other technologies to this platform, enhancing the power of the tools Vonage offers and allowing carriers to leverage their 5G investment through new services.
In addition to increasing spending on research and development, Ericsson plans to offer Vong’s unified communications services to its operating partners as white-label products, expanding their offerings and increasing revenue.
“In the future, network capabilities will be consumed and paid for by open network APIs, creating an opportunity for unparalleled innovation,” said Borgy Ekholm, CEO of Ericsson. “We have already launched our first network API, Dynamic End-user Boost, based on our existing 4G infrastructure…and we aim to launch our first 5G network APIs next year.
“We will continue to create new and improved applications and services for enterprises, while driving continued innovation in Vonage’s UCaaS and CCaaS applications, helping companies create new digital experiences to improve communications, communications and engagement.”
The acquisition also strengthens Ericsson’s presence in the United States, where it is a partner of major operators, with manufacturing and development operations.