Ericsson to book $1.1 billion impairment on weaker outlook for Vonage
5:23 pm Wednesday, July 03rd, 2024
(Reuters) -Mobile telecoms equipment maker Ericsson said on Wednesday it will record a noncash impairment charge of 11.4 billion Swedish crowns ($1.09 billion) in the second quarter of 2024, the second writedown on its acquisition of Vonage.
The impairment charge reflects lower anticipated market growth in some of Vonage’s current portfolio, the company said in a statement.
The Swedish telecom gear maker bought cloud communication firm Vonage in 2022 for $6.2 billion.
“Given deterioration in the market environment and elective decisions we have made to refocus our investments in strategically prioritized areas, we have reassessed certain growth assumptions,” Vonage Chief Executive Officer Niklas Heuveldop said.
We continue to advance our strategy to build a Global Network Platform for network application programming interfaces (APIs), which was the strategic impetus for the Vonage acquisition, he added.
This comes after Ericsson said in 2023 it recorded a 32 billion Swedish crown impairment charge related to the acquisition.
At the time of the deal, it was decided that Vonage would operate as an independent unit of Ericsson. Heuveldop was appointed new Head of Business Area Global Communications Platform and CEO of Vonage earlier this year.
($1 = 10.4934 Swedish crowns)
(Reporting by Devika Nair in Bengaluru; Editing by Alan Barona, Matthew Lewis and Sonali Paul)
