FILE PHOTO: Ericsson logo is displayed on the company's headquarters building in Stockholm, Sweden, January 23, 2024. TT News Agency/Henrik Montgomery via REUTERS/File Photo
STOCKHOLM: Swedish telecom-equipment maker Ericsson AB reached a US$1bil deal to sell its US call-routing business Iconectiv to a private investment arm of Koch Industries Inc.
Ericsson expects to get about 10.6 billion kronor (US$1bil) in cash after taxes, transaction expenses and other liabilities as part of the takeover by Koch Equity Development, the company said in a statement last Friday.
The deal is expected to close in the first half of 2025 and result in one-time earnings of about 8.8 billion kronor.
Ericsson has been working to cut costs and improve margins in a challenging telecom-equipment market. The company, along with its Nordic competitor Nokia Oyj, has been struggling with dismal demand for years as anticipated spending on 5G technology failed to materialise.
Ericsson had begun a sales process for Iconectiv in 2020, Bloomberg News reported at the time. The unit was expected to be valued at about US$1.5bil to US$2bil then.
Koch Industries, a sprawling conglomerate that’s best known for its refineries and chemical plants, has long been a huge investor in technology and growth equity.
In 2020, Koch Equity Development bought the rest of cloud-software maker Infor Inc that Koch Industries didn’t already own in a deal that valued the firm at US$11bil, or nearly US$13bil including preferred shares.
Bridgewater, New Jersey-based Iconectiv provides communications solutions to more than 5,000 customers including telecom companies and government agencies, according to Ericsson’s statement and the company’s website.
It also provides numbering solutions, which allows users keep their numbers when switching providers. — Bloomberg
