Ericsson sells US call routing business iconectiv for $1 billion
Ericsson has agreed to sell its U.S. subsidiary iconectiv to Koch Equity Development LLC for about 10.6 billion Swedish kronor ($1 billion).
The agreement is expected to yield a one-time gain before interest and taxes of approximately SEK 8.8 billion ($800 million) for Ericsson upon completion.
iconectiv, which has been part of the Swedish telecom giant’s portfolio since its acquisition in 2012, operated within Ericsson’s Enterprise segment.
Ericsson sells Iconectiv for $1 billion
iconectiv specializes in number portability, core network and operations management, numbering and data exchange services. Despite healthy finances, which will contribute approximately $100 million to Ericsson’s net income in 2023, the businesses are not as strategically aligned as initially hoped.
Ericsson has co-owned iconectiv with private equity firm Francisco Partners since 2017. The sale to Koch is seen as a strategic move that allows Ericsson to refine its business focus.
The transaction, subject to customary closing conditions and regulatory approvals, is expected to close in the first half of 2025. Ericsson expects a cash benefit of approximately $1 billion after taking into account expected taxes, transaction costs and other liabilities.
The proceeds from the sale will help Ericsson streamline its operations and focus on its core business, thereby strengthening its financial position in a changing telecommunications market.
The Swedish company reported a 7% decline in net sales in the most recent quarter compared to the previous year, but the 12% increase from the previous quarter shows signs of recovery.