Ericsson Completes $6.2 Billion Vonage Acquisition

Swedish telecom-equipment giant Ericsson has completed its acquisition of Vonage Holdings Corp., a deal worth $6.2 billion when it was first announced last November. Ericsson’s strategy is to grow its mobile network business and expand into the enterprise market now that it has access to Vonage’s UCaaS, CCaaS and CPaaS offerings.

The closing comes after a delay due to an investigation by a U.S. national security panel.

In addition, the acquisition means Ericsson can “transform the way advanced 5G network capabilities are exposed, consumed and paid for,” according to a company statement. This will provide developers globally, including Vonage’s more than 1 million registered developers, with easy access to 4G and 5G network capabilities through open application programming interfaces (APIs), officials said.

APIs and 5G

The API platform within the cloud-based Vonage Communications Platform allows developers to embed communications. That includes messaging, voice and video — into applications and products.

Ericsson’s Börje Ekholm

Börje Ekholm is Ericsson’s president and CEO.

“In the future, network capabilities will be consumed and paid for through open network APIs, creating the opportunity for unparalleled innovation. … 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 engagement.”

He added: “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 will become a separate business unit within the Ericsson Group. Rory Read, CEO of Vonage, will become senior vice president and head of the Business Area Global Communications Platform. He is a member of Ericsson’s executive team.

Ericsson’s Rory Read

“Vonage was born out of innovation and is today a global leader in business cloud communications,” Read said. “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.”

Partner Community

We caught up with Vonage channel chief Jim Regan for an episode of Channel Futures TV in April. He expressed excitement about the “breadth and depth” of what the two companies can offer together.

Vonage’s Jim Regan

“I think with this acquisition, there’s so much that our partners are going to see as a result,” Regan said. “From a resource standpoint, from a focus on 5G, IoT … we know are partners are tremendously excited about this.”

Regan praised the complementary portfolio that Ericsson brings to its tie-up with Vonage.

Market Opportunities, Challenges

Jon Arnold is principal at J Arnold & Associates. He says the deal is important for Ericsson because of the API component.

J Arnold & Associates’ Jon Arnold

“APIs are these open interfaces that allow developers and programmers to kind of customize their applications themselves,” said Arnold. “So that’s a really strong draw for a lot of businesses. Because when you can program your own communications, you have more flexibility to customize things and cater to your customers. So, when you combine 5G wireless with end-to-end applications, Ericsson brings a stronger story and a reason for carriers to go with them.”

However, Arnold cautions there are weak spots to the deal. In the next three years, UCaaS will become more of a commodity. That will make it difficult for companies to earn money in the industry. From Cisco to RingCentral, there are a lot of choices in the UCaaS market, he noted.