Ericsson to buy Vonage for CPaaS expansion

Nov. 22, 2021
The deal, expected to close in the first half of next year, will see Vonage become a wholly owned subsidiary of Ericsson while providing extension into the communications platform as a service (CPaaS) space, particularly the enterprise wireless market.

Ericsson (NASDAQ: ERIC) says it has agreed to buy Vonage Holdings Corp. (NASDAQ: VG) for $21.00 per share in cash, which translated into an enterprise value of approximately $6.2 billion. The deal, expected to close in the first half of next year, will see Vonage become a wholly owned subsidiary of Ericsson while providing extension into the communications platform as a service (CPaaS) space, particularly the enterprise wireless market.

Vonage initially made its mark as a pioneer in the voice over IP (VoIP) space (see "Vonage taps Force10 for network expansion"). It has since developed and marketed the Vonage Cloud Platform, which serves more than 120,000 customers and more than a million registered developers globally. Its API is designed to enable developers to embed communications capabilities -- including messaging, voice, and video -- into applications and products without back-end infrastructure or interfaces, says Ericsson. Vonage also provides unified communications as a service (UCaaS) and contact center as a service (CCaaS) via the VCP.

Ericsson sees access to the VCP and the CPaaS space, combined with its own expertise, as enabling platform for innovation that will better serve telecom operators, developers, and businesses. “Today network APIs are an established market for messaging, voice, and video, but with a significant potential to capitalize on new 4G and 5G capabilities,” commented Börje Ekholm, president and CEO of Ericsson. “Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way. This will allow them to develop new innovative global offerings. Communication service providers will be able to better monetize their investments in network infrastructure by creating new API-driven revenues. Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”

“Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy,” added Rory Read, CEO of Vonage, who will join Ericsson’s Executive Team and report to Ekholm. “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. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave.”

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