- As of July 21, 2022, Vonage
becomes wholly owned subsidiary of Ericsson
- With Vonage on board, Ericsson will create a market for easy to
adopt global network Application Program Interfaces ("APIs"); this
will drive the next wave of digitalization
- Ericsson will generate near-term synergies from bringing Vonage
Unified Communications as a Service (UCaaS) and Contact Center as a
Service (CCaaS) solutions to its existing customers
- Rory Read, Vonage CEO, appointed
member of Ericsson's Executive Team
STOCKHOLM, July 21,
2022 /PRNewswire/ -- Ericsson (NASDAQ: ERIC) has
completed its acquisition of Vonage Holdings Corp. (Vonage)
(NASDAQ: VG), supporting Ericsson's strategy to leverage technology
leadership to grow its mobile network business and expand into
enterprise. The acquisition provides Ericsson with access to
powerful building blocks to offer a full suite of communications
solutions including, Communications Platform as a Service (CPaaS),
UCaaS and CCaaS.
By leveraging the Vonage CPaaS offering, Ericsson aims to
transform the way advanced 5G network capabilities are exposed,
consumed and paid for. This will provide the global developer
community, including Vonage's more than one million registered
developers, with easy access to 4G and 5G network capabilities via
open Application Program Interfaces (APIs).
For communications service providers (CSPs), global network APIs
- such as location and quality of service APIs - provide new
opportunities to expand their profit pools to monetize 5G network
capabilities. For Ericsson, global APIs provide a new material
growth opportunity. The existing market for communications APIs -
such as video, voice and SMS - is currently growing at 30 percent
annually and projected to reach USD 22
billion by 2025.
Accessing network capabilities in an open, intuitive, and
programmable way via global APIs will enable developer communities
to create applications for any device that benefits from connection
to the 5G network. Developers can utilize network characteristics
such as user authentication, bandwidth, responsiveness, energy
efficiency, security, identification and reliability - or network
information such as device information or predictive coverage.
These new and innovative consumer and enterprise applications
will further drive the rollout of 5G and network Capex.
To accelerate growth in Vonage's UCaaS and CCaaS solutions,
Ericsson intends to increase R&D investments and offer these
solutions to CSPs, enabling Ericsson's existing customers to sell
through their own brands, and accelerate growth. Ericsson will also
complement existing communications offerings to small and medium
sized companies with the Vonage UCaaS and CCaaS solutions which
will form a strong part of Ericsson's offerings to both CSPs and
Börje Ekholm, President and CEO, says: "We are excited to
welcome Vonage as part 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.
With Vonage, we will now develop and commercialize these new
APIs. We are already seeing great progress with frontrunner
CSPs, and we aim to launch the first 5G network APIs in the coming
year. We will continue to create new, enhanced applications
and services for enterprises, while driving continued innovation on
Vonage's UCaaS and CCaaS applications, helping businesses create
new digital experiences for better communications, connections and
"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
"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."
Vonage was recently named the leader in the Omdia Universe:
Selecting a CPaaS Platform 2022 report, ranked in top positions on
customer experience and solutions capability. It currently serves
over 120,000 business customers, has a global community of more
than one million registered developers and a highly scaled platform
with a combined 25 billion messages and minutes per year. This,
combined with Ericsson's deep network expertise, industry-leading
portfolio and global scale, is expected to enable Ericsson to seed
and accelerate the market for global network APIs. CSPs will
benefit from global reach, beyond national or regional setups.
The acquisition will also further strengthen Ericsson's presence
and long-term commitment to the United
States, where it has a 120-year history of conducting
Rory Read, Vonage CEO, says:
"Vonage was born out of innovation and is today a global leader in
business cloud communications. This partnership will strengthen our
offerings to businesses across the globe by leveraging Ericsson's
leadership in 5G, global market presence and strong R&D
capabilities. With the demand for UCaaS, CCaaS and Communications
APIs growing rapidly, the combined expertise, talent and innovation
is good news for our customers and partners."
He adds, "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
Additional information about the transaction
The transaction is expected to be accretive to Ericsson's EPS
(excluding non-cash amortization impacts) and free cash flow before
Mergers & Acquisitions (M&As) from 2024 onwards.
Vonage will become a separate business area within the Ericsson
Group - called Business Area Global Communications Platform (BGCP).
Rory Read, current CEO of Vonage, is
appointed Senior Vice President and Head of Business Area Global
Communications Platform and a member of Ericsson's Executive
With the completion of the transaction, Vonage will continue to
operate under its existing name and brand being part of the
As of the closing date, Vonage's financial performance will be
reported in Segment Enterprise along with Business Area Enterprise
Wireless Solutions and Business Area Technologies & New
Businesses as of the third quarter 2022.
Vonage common stock has ceased trading and will no longer be
listed on the Nasdaq Global Select Market.
The acquisition was funded with cash on hand. The USD amount has
been hedged with both external transactions and internal netting of
Ericsson's ongoing USD inflows.
The transaction is expected to deliver near-term revenue synergy
opportunities, including CSPs selling through their own brands and
cross-selling of the combined product portfolio estimated to
contribute USD 0.4 billion by 2025.
Ericsson also expects to achieve some cost efficiencies now that
the deal is complete.
Vonage has a strong track record of growth and margin evolution.
Sales were USD 1.4 billion in the
12-month period to 31 March 2022, and
over the same period, the company delivered an adjusted EBITDA
margin of 13 percent and free cash flow of USD 93 million.
Ericsson remains committed to the previously communicated
long-term financial targets of an EBITA margin of 15-18 percent and
Free Cash Flow before M&A of 9-12 percent of sales; as well as
the 2022 EBIT margin target of 12-14 percent for the Ericsson Group
Vonage is currently engaged with the U.S. Federal Trade
Commission to resolve an investigation into historic consumer
practices which was initiated in 2020.
NOTES TO EDITORS:
Ericsson Enterprise Services
Dynamic End User Boost
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MORE INFORMATION AT:
Phone: +46 10 719 69 92
Phone: +46 10 719 00 00
Ericsson enables communications service providers to capture the
full value of connectivity. The company's portfolio spans the
business areas Networks, Cloud Software and Services, Enterprise
Wireless Solutions, and Technologies and New Businesses. It is
designed to help our customers go digital, increase efficiency and
find new revenue streams. Ericsson's innovation investments have
delivered the benefits of mobility and mobile broadband to billions
of people globally. Ericsson stock is listed on Nasdaq Stockholm
and on Nasdaq New York. www.ericsson.com
Vonage, a global cloud communications leader, helps businesses
accelerate their digital transformation. Vonage's Communications
Platform is fully programmable and allows for the integration of
Video, Voice, Chat, Messaging and Verification into existing
products, workflows and systems. Vonage's fully programmable
unified communications and contact center applications are built
from the Vonage platform and enable companies to transform how they
communicate and operate from the office or anywhere, providing
enormous flexibility and ensuring business continuity. Vonage
Holdings Corp. is headquartered in New
Jersey, with offices throughout the United States, Europe, Israel and Asia. www.vonage.com
This release includes forward-looking statements, including
statements reflecting management's current views relating to the
growth of the market, future market conditions, future events,
financial condition, and expected operational and financial
performance, including, in particular the following:
- Our goals, strategies, planning assumptions and operational or
financial performance expectations
- Industry trends, future characteristics and development of the
markets in which we operate
- Our future liquidity, capital resources, capital expenditures,
cost savings and profitability
- The expected demand for our existing and new products and
services as well as plans to launch new products and services
including research and development expenditures
- The ability to deliver on future plans and to realize
potential for future growth
- The expected operational or financial performance of strategic
cooperation activities and joint ventures
- The time until acquired entities and businesses will be
integrated and accretive to income
- Technology and industry trends including the regulatory and
standardization environment in which we operate, competition and
our customer structure.
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acquisition of Vonage