SWEDISH telecom equipment maker Ericsson reached a US$1 billion deal to sell its US call-routing business Iconectiv to a private investment arm of Koch.
Ericsson expects to get about 10.6 billion kronor (S$1.3 billion) in cash after taxes, transaction expenses and other liabilities as part of the takeover by Koch Equity Development, the company said on Friday (Aug 16). 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, 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$1.5 billion to US$2 billion then.
Koch, 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 that Koch did not already own in a deal that valued the firm at US$11 billion, or nearly US$13 billion 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. It also provides numbering solutions, which allow users to keep their numbers when switching providers, and has worked with clients including AT&T and Verizon Communications. BLOOMBERG
