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ERICSSON AND VONAGE
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According to hindubusinessonline.com
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, Ericsson acquired Vonage for six billion dollars. This
is one of telecommunication companies' most important business deals and mergers in 2021.
Ericsson, a Swedish telecom equipment maker, has recently agreed with a Cloud communication
provider, i.e. Vonage, to merge to build an enterprise business. This company was established in
2001 as a residential communication provider that gives voice over Internet Protocol. They have
signed that Ericsson will make all the payments in cash. With the completion of payment, the
share percentage of Ericsson in Vonage will increase, and after full payment, Ericsson will
ultimately acquire Vonage.
Why did Ericsson buy the Vonage? After seeing this news, two schools of thought were created
because Ericsson paid a large amount of money for this merger. The first group thinks it is not a
good approach because Ericsson has been left behind in this market, and their competitors have
left them far behind. But the second group thinks that this deal with help Ericsson gets
worldwide attention by introducing 5G.
The world is aware that Ericsson is helping AT&T bring its 5G network to more consumers and
businesses. When 4G were introduced, the new era in networking was started, and a race was
initiated that which country or telecommunication company would first bring the 5G. However,
some countries are already one step ahead because they are working on 6G technologies.
Ericsson owner announced at the start of this year that they are at the forefront of 5G, edge
computing, and cloud infrastructure era. They aim to bring the 5G in four continents, so they are
merging with Vonage. Vonage is a consumer-focused service provider that generates more than
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https://www.thehindubusinessline.com/info-tech/ericsson-to-acquire-vonage-holdings-corp-for-62-
billion/article37621168.ece?__cf_chl_captcha_tk__=ti2uknEJaEumYqktjYoSumuSzhVUwRPEvW.YRWw6_1U-
1640608161-0-gaNycGzNCL0
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one billion dollars. Ericsson debts have increased after their merger, but Vonage has received six
times that they gain as revenue in a year. However, this will increase the business of Ericsson by
many folds.
Although Vonage was not losing profit, Ericsson’s deal was good. The entire payment will be
paid in the first half of 2022, but Ericsson has already started working the Vonage. There are
various benefits associated with this merger because Ericsson business will expand in wireless
technology. Before the merger, more than eighty per cent of Vonage profits came from
communication platforms (VCP). When Ericsson takes over this technology, they will unlock
new possibilities of wireless technologies. Ericsson knows the capabilities of 5G, and that is why
they don’t want to take any chances of losing in the market
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. Ericsson.com has mentioned that
this acquisition of Vonage is the next step in delivering on that strategic priority. Vonage
technologies can help to connect the eight billion people through devices. These global offerings
will benefit their country and every other country that will use the services of Ericsson and
Vonage. Ericsson CEO
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shared their both of these companies shared the same ambition to
accelerate long-term growth strategy. Last year, Ericsson merged with Cradlepoint, and they
continue to thrive under the leadership of Ericsson.
Ericsson has expected that the profits will increase by thirty per cent annually in 2025. Their
current revenue is more than thirty-six billion dollars, and it is already mentioned that Vonage
has revenue of around one billion dollars. Many expensive mergers happened in history, and not
every merger has become successful, but in this case, the odds are with Ericsson because of their
2
https://www.fool.com/investing/2021/11/23/ericsson-6-billion-vonage-acquisition-a-smart-move/
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https://www.ericsson.com/en/press-releases/2021/11/ericsson-to-acquire-vonage-for-usd-6.2-billion-to-spearhead-
the-creation-of-a-global-network-and-communication-platform-for-open-innovation
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excellent market reputation. Ericsson can engage the investors in this merger, which will speed
up the process. It can be concluded that Ericsson has made the right acquisition decision with
Vonage.

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