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Tuesday, July 23, 2024

Ericsson to record $1.1 billion impairment due to Vonage’s weaker outlook

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In Short:

Ericsson will take a $1.09 billion impairment charge in the second quarter of 2024 due to lower expected market growth for Vonage, which it acquired in 2022 for $6.2 billion. Vonage’s CEO stated that the company is refocusing investments in key areas and reassessing growth assumptions. Ericsson previously took a 32 billion Swedish crown impairment charge related to the acquisition in 2023. Heuveldop was appointed as new Head of Business Area Global Communications Platform and CEO of Vonage this year.


Ericsson to Record $1.09 Billion Impairment Charge in Q2 2024

Mobile telecoms equipment maker Ericsson announced on Wednesday that it will incur a noncash impairment charge of 11.4 billion Swedish crowns ($1.09 billion) in the second quarter of 2024, marking the second writedown on its acquisition of Vonage.

Reason for Impairment Charge

The impairment charge is attributed to lower anticipated market growth in certain areas of Vonage’s current portfolio, the company stated in a release.

Ericsson acquired cloud communication firm Vonage in 2022 for $6.2 billion, with the intention of building a Global Network Platform for network application programming interfaces (APIs).

Statement from Vonage CEO

“Given deterioration in the market environment and our strategic decision to reallocate investments to key areas, we have reevaluated certain growth assumptions,” stated Vonage Chief Executive Officer Niklas Heuveldop.

This latest impairment charge follows Ericsson‘s previous announcement in 2023 of a 32 billion Swedish crown impairment charge related to the Vonage acquisition.

Following the acquisition, it was decided that Vonage would operate as an independent unit within Ericsson, with Heuveldop being appointed as the new Head of Business Area Global Communications Platform and CEO of Vonage earlier this year.

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