Ericsson completes $6.2 billion Vonage acquisition

Having got the green light from US authorities last week, Swedish kit vendor Ericsson has now successfully brought cloud and API specialist Vonage under its corporate wing.

Ericsson’s biggest ever acquisition has gone through, having travelled a rocky road over the last few months as US authorities made a point of scrutinising the deal as part of a wider investigation into some alleged dodgy dealings Ericsson, or its representatives, may have engaged in in Iraq.

US authorities previously fined Ericsson for corrupt activities in various countries, reducing the amount on the condition that there were no further infringements. Then earlier this year an internal enquiry ‘identified evidence of corruption-related misconduct’ in Iraq. This included: making a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants.

In short, the inference was the kit vendor may have in some way shape or form ended up handing over money to terrorist group ISIS – which is not a great look. US authorities subsequently started having a proper nose into Ericsson’s activities and the Vonage purchase, initially announced in November last year, got sucked into the investigation and called into question.

It was eventually given the green light however, and has now been completed. What will Ericsson get for its $6.2 billion? ‘Access to powerful building blocks to offer a full suite of communications solutions including, Communications Platform as a Service (CPaaS), UCaaS and CCaaS,’ says the release. Ericsson also wants to transform the way 5G capabilities are ‘exposed, consumed and paid for.’

This could all probably take a number of forms which perhaps even Ericsson hasn’t fully got into focus yet, but the broad stroke of it seems to be about expanding the number of companies it can sell to by having a suite of APIs that can leverage new 5G business opportunities.

“We are excited to welcome Vonage as part of Ericsson,” said Börje Ekholm, President and CEO of Ericsson. “With Vonage’s suite of communications solutions – UCaaS, CCaaS and Communications APIs – Ericsson will further expand its offerings into the enterprise space. In the future, network capabilities will be consumed and paid for through open network APIs, creating the opportunity for unparalleled innovation. We have already launched the first network API, Dynamic End-user Boost, based on existing 4G infrastructure.

“By linking the network world with the global developer community, we’re creating a paradigm shift that will put the network at the center, allowing the CSPs a new monetization opportunity supporting increasing investments in high-performance networks. 4G was the platform that allowed the consumer to digitalize. It opened new business models and created some of the fastest-growing companies in history. With 5G, we have an innovation platform, unlike anything we’ve seen before, offering almost limitless opportunities to develop super-fast, highly reliable, low-latency and mission-critical services. With 5G, we will see accelerated digitalization of enterprises with Vonage’s UCaaS and CCaaS suite being a solid growth platform.”

Rory Read, Vonage CEO added: “The way we work, shop, learn, see a doctor, exercise and entertain is fundamentally changing. Together, Ericsson and Vonage will be at the heart of the next wave of the digital transformation, providing enterprises, CSPs and end users with innovative applications and services that will change how business gets done. We will drive deeper connections and engagement among employees and across customer touchpoints, making for exceptional experiences.”

The full extent of the US investigation into Ericsson’s alleged missteps in Iraq are yet to be seen, but there will no doubt be a sigh of relief amongst those behind the deal that it didn’t end up torpedoing it at least – though some commentators still have questions as to how much sense the purchase of Vonage makes, especially considering the high price tag it came with.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.