SWEDISH telecoms equipment maker Ericsson paid $6.2bn (£4.6bn) yesterday in cash for cloud-based services group Vonage in its largest acquisition yet.
It comes as Ericsson continues to restructure its business following tension with China over Stockholm's Huawei crackdown. Ericsson hopes to utilise Vonage's internet telephony in the US to become an enterprise business, as well as utilise Vonage's 120,000 customers and 1m developers.
A spokesperson for Ericsson said that the acquisition was a "long-term strategic" move, and looks to bring 5G as "a catalyst to transform growth opportunities for the business in more than 180 Ericsson markets globally." They continued: "5G has been designed with enterprise use in mind and we expect the demand for new services, innovations and value creation enabled by 5G will grow significantly over the coming years."
However, analysts at Mirabaud Equity Research were less convinced by the hefty acquisition for Ericsson.
Analysts said: "We think this a low-margin, low-end cloud tech with little differentiation and needs heavy lifting to close deals at low margins."
"Ericsson doesn't appear to be buying a leader here, but a company that has underinvested in R&D and struggled to move upmarket."
(c) 2021 City A.M., source Newspaper