Ericsson buys Vonage for $ 6.2 billion to increase API, 5G and CPaaS capabilities

In the largest acquisition in its history, Ericsson is diving deep into the communications platform as a service market with its $ 6.2 billion acquisition of Vonage and plans to scale up its API capabilities and 5G to the next level.

“Imagine putting the power and capabilities of 5G, the world’s largest innovation platform, within the reach of developers,” Ericsson CEO and Chairman Börje Ekholm said in a statement. “Then add the advanced capabilities of Vonage in a world of 8 billion connected devices. Today we are making it possible.

Ericsson expects the deal to provide revenue synergy opportunities, including the white label and cross-sell of the combined portfolio, of around $ 400 million by 2025.

The goal is to dramatically expand Ericsson’s global wireless enterprise footprint, by adding the Vonage cloud-based Vonage Communications Platform (VCP), which serves more than 120,000 customers and more. ‘one million registered developers. Specifically, the API platform within VCP allows developers to integrate communications, such as voice, video, and messaging, into applications and products without the need for back-end infrastructure or interfaces. -end.

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“Network APIs are an established market for messaging, voice and video, but with significant potential to capitalize on new 4G and 5G capabilities. Vonage’s strong developer ecosystem will have access to 4G and 5G network APIs, exposed in a simple and unified way globally. This will allow them to develop new innovative global offerings, ”said Ekholm. “Communication service providers will be able to better monetize their network infrastructure investments by creating new API-based revenues. Finally, businesses will benefit from the performance of 5G, impacting operational performance, and share new value from applications above the network.

By combining Vonage’s customer base and developer community with Ericsson’s network expertise, 26,000 R&D specialists and global reach, the companies plan to create new opportunities to accelerate strategy and innovation. This includes accelerating the digitization of business and the development of advanced APIs made possible by 5G.

Ericsson said these APIs can be applied to help ensure the quality of critical services such as telemedicine, immersive virtual education, and wireless autonomous vehicles.

Vonage CEO Rory Read said the convergence of internet, mobility, cloud and 5G networks is forming a “wave” of digital transformation and smart communications that is changing the way businesses operate.

“The combination of our two companies provides exciting opportunities for customers, partners, developers and team members to seize this next wave,” Read said in a statement.

With increasing business demand for programmable networks, CPaaS solutions can help democratize network access by offering API-compliant communication services. The rapidly growing CPaaS market is expected to reach $ 22 billion by 2025, growing at 30% per year, Ericsson said.

The transaction is expected to be finalized in the first half of 2022.

Looking at the financial terms of the deal, Ericsson will acquire all of the outstanding shares of Vonage at a cash price of $ 21 per share.

Vonage will become a wholly owned subsidiary of Ericsson and will continue to operate under its current name. The Holmdel, New Jersey-based communications specialist reported $ 1.4 billion in revenue from September 2020 to September 2021.

Vonage’s 2,200 employees will remain with the company and Vonage CEO Read will join the Ericsson management team, reporting to Ekholm.

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