Vonage's footprint in the CPaaS segment is said to provide the Swedish firm with the opportunity to access a high growth segment

Ericsson HQ, Kista

Vonage to be acquired by Ericsson. (Credit: Telefonaktiebolaget LM Ericsson)

Ericsson has agreed to acquire Vonage, a US-based publicly-listed cloud-based communications provider for $21 per share in cash, at an enterprise value of around $6.2bn.

Vonage’s communication platform is said to serve more than 120,000 customers and over a million registered developers around the world.

The company’s application programming interface (API) platform within the communication platform enables developers in embedding communications modes such as voice, video, and messaging into products and applications, without any back-end interfaces or infrastructure.

As part of its communications platform, Vonage also offers unified communications as a service (UCaaS) and contact centre as a service (CCaaS) solutions.

Vonage’s sales for the 12 months to 30 September 2021 were $1.4bn.

Vonage CEO Rory Read said: “Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy. 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.”

Ericsson said that Vonage’s footprint in the CPaaS segment will give it scope to access a high growth segment that is complementary as well as significant to the company.

The Swedish firm further said that the combination of its deep network expertise, 26,000 research and development specialists and global presence with the customer base and developer community of Vonage will generate opportunities to fast track independent strategies and innovation in the market.

Ericsson stated that the acquisition of the cloud-based communications provider builds on the integration of Cradlepoint into the company in September 2020. Cradlepoint, which is a US-based Wireless Edge WAN 4G and 5G Enterprise solutions provider was acquired by Ericsson for $1.1bn.

Ericsson president and CEO Börje Ekholm said: “The core of our strategy is to build leading mobile networks through technology leadership. 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 monetise the investments in the network, benefitting developers and businesses.”

The deal, which is subject to Vonage’s shareholders’ approval, regulatory approvals, and other customary conditions, is anticipated to close within the first half of next year.

Upon completion, Vonage will become a fully-owned subsidiary of Ericsson and will retain its existing name.