International networking company Ericsson has announced its intention to take on the path of modernization by acquiring cloud communications company Vonage in a deal that cost it $6.2 billion. The reason for the acquisition is to apply a more modern and/or conventional approach to communications. The acquisition will give Ericsson a cloud contact centre, communications APIs and a voice over internet protocol (VoIP) solution needed to scale its networking operations. Ericsson, with its acquisition of Vonage, wants to build on its 4G and 5G networking technology by leveraging Vonage’s technology.
According to data from crunchbase, Vonage launched in 2001 with a VoIP product and raised almost $600 million before going public in 2006. It acquired cloud contact centre startup NewVoiceMedia in 2018 for $350 million.
According to President and CEO of Ericsson, Borje Ekholm, the acquisition is a strategic one as the company plans on capturing more enterprise business. His statement read “This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefiting developers and businesses”. It is pertinent to know that Ericsson’s focus is on Vonage’s communications API which it believes is the key to opening new doors and tapping into a network of developers from various parts of the world using the 4G and 5G technology to build applications.
Speaking on the acquisition, Vonage’s CEO Rory Read said that the deal was one that could not be turned down as becoming a part of a much bigger company like Ericsson meant a lot of good things for Vonage. “We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business cloud communications, our innovative product portfolio and outstanding team”, he said.
Vonage has generated $1.4 billion in the last 12 months ending September 30th, an indicator that shows that Ericsson bought a healthy company. Ericsson will also be getting access to all of Vonage 120,000 customers and over 1 million registered developers on Vonage’s radar.
Like other acquisitions, the Ericsson-Vonage deal is subject to regulatory decisions and is expected to be completed by the first half of 2022.