Vonage Sold To Ericsson For $6.2 Billion

Cloud communications specialist Vonage has been acquired by Swedish networking giant Ericsson, the two firms have confirmed.

The announced deal saw Ericsson pay $6.2 billion cash offer to acquire Vonage, after the unanimous approval of the Vonage Board of Directors.

Vonage of course is perhaps best known as a pioneer of voice over Internet Protocol (or VoIP), a couple of years before the likes of Skype and others brought it into the mainstream.

Ericsson acquisition

Ericsson’s move to acquire Vonage will bolster the Swedish’s giant’s offerings for enterprise communication services, giving developers at corporate businesses the opportunity to develop their cloud-based communication services.

Read Silicon UK’s Tales In Tech History piece on Vonage.

This is Ericsson’s largest acquisition to date, and signals its attempt to diversify its portfolio from just being a core mobile infrastructure business.

Ericsson for example has undergone years of restructuring, and is a key player in the 5G equipment market, after the Western clampdown on Chinese firms such as Huawei.

“The merger agreement was approved unanimously by the Board of Vonage,” said Ericsson. “The transaction builds upon Ericsson’s stated intent to expand globally in wireless enterprise, offering existing customers an increased share of a market valued at $700 billion by 2030.”

“The core of our strategy is to build leading mobile networks through technology leadership,” said Börje Ekholm, President and CEO of Ericsson. “This provides the foundation to build an enterprise business. Vonage gives us a platform to help our customers monetise the investments in the network, benefitting developers and businesses.”

New offerings

“Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers,” said Ekholm. “Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”

Ekholm pointed out that network APIs are currently an established market for messaging, voice and video, but with no significant potential to capitalise on new 4G and 5G capabilities.

“Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way,” said Ekholm. “This will allow them to develop new innovative global offerings.”

“Communication Service Providers will be able to better monetise their investments in network infrastructure by creating new API driven revenues,” he concluded. “Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”

The cloud-based Vonage Communications Platform serves more than 120,000 customers and more than one million registered developers globally.

“The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate,” noted Rory Read, CEO of Vonage.

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“The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave,” said Read.

VoIP pioneer

The Vonage acquisition comes after Ericsson acquired Cradlepoint in September 2020.

Vonage of course was a pioneer of internet telephony in the US.

Indeed, Vonage launched its VoIP offering in 2001 under the name of Min-X.com (it changed its name to Vonage in December 2000).

The firm was initially based in Melville, New York and was founded by CEO Jeffrey Citron, but in January 2001 Vonage moved to Edison, New Jersey.

It then relocated its HQ again in 2005 to Holmdel, New Jersey (its current home).

The deal is expected to close in the first half of 2022, subject to shareholder and regulatory approvals.