Ericsson announces sale of iconectiv
Rhea-AI Summary
Ericsson (NASDAQ: ERIC) has announced the sale of its US subsidiary iconectiv to Koch Equity Development The transaction is expected to generate a cash benefit of approximately SEK 10.6 billion (USD 1.0 billion) for Ericsson after taxes and expenses. The company anticipates recording a one-off EBIT benefit of about SEK 8.8 billion (USD 0.8 billion) upon closing. iconectiv, acquired by Ericsson in 2012, is a leading provider of network number portability solutions and data exchange services. The sale is subject to regulatory approvals and is targeted for completion in the first half of 2025. In 2023, iconectiv contributed approximately SEK 1.0 billion (USD 0.1 billion) to Ericsson's net income.
Positive
- Expected cash benefit of SEK 10.6 billion (USD 1.0 billion) from the sale
- Anticipated one-off EBIT benefit of SEK 8.8 billion (USD 0.8 billion)
- Divestment allows iconectiv to continue growth under new ownership
Negative
- Loss of iconectiv's SEK 1.0 billion (USD 0.1 billion) contribution to annual net income
- Reduction in Ericsson's portfolio diversity and market presence in number portability solutions
Insights
Ericsson's divestment of iconectiv is a strategic move with significant financial implications. The
The expected one-off EBIT benefit of
The sale of iconectiv highlights Ericsson's strategic shift away from non-core assets. While iconectiv provides critical services in number portability and data exchange, its synergies with Ericsson's main portfolio suggest this divestment could enhance operational focus. The telecom industry is rapidly evolving with 5G rollouts and emerging technologies; this move may allow Ericsson to reallocate resources to more strategically aligned areas.
Koch Equity Development's acquisition of iconectiv is intriguing. Their involvement could potentially accelerate iconectiv's growth in sectors beyond traditional telecom, possibly into areas like IoT or smart city infrastructure. This transaction underscores the ongoing consolidation and specialization trends in the tech industry, as companies refine their portfolios to remain competitive in a fast-changing landscape.
- iconectiv is a US subsidiary of Ericsson acquired in 2012, and a provider of network number portability solutions and data exchange services
- The divestment will allow iconectiv to continue its growth trajectory under the new ownership of Koch Equity Development LLC
Ericsson's cash benefit from the Transaction, after the settlement of anticipated taxes, transaction expenses, and other liabilities, is expected to be approximately
Ericsson expects to record a one-off EBIT benefit of approximately
The Transaction is subject to customary closing conditions, including regulatory approvals, with completion targeted during the first half of calendar 2025.
iconectiv is consolidated by Ericsson and reported within Segment Enterprise. iconectiv's contribution [2] to Ericsson 2023 net income was approximately
iconectiv is a US subsidiary of Ericsson acquired in 2012 as part of the Telcordia acquisition. Since 2017, iconectiv has been co-owned with private equity firm Francisco Partners. iconectiv serves over 5,000 customers across various sectors as a leading provider in number portability solutions, and a provider of core network and operations management, numbering and data exchange services as its main segments, and with limited strategic synergies with the rest of Ericsson's portfolio.
[1] Assuming a USD - SEK exchange rate of 10.56. Realized exchange rate to be determined on closing.
[2] Contribution to net income including minority interests and shareholder loan impacts. Ericsson's shareholder loan to iconectiv was
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Forward-looking statements
This release includes forward-looking statements. All statements other than statements of historical fact are forward-looking statements. The words "believe," "expect," "foresee," "anticipate," "assume," "intend," "likely," "projects," "may," "could," "plan," "estimate," "forecast," "will," "should," "would," "predict," "aim," "ambition," "seek," "potential," "target," "might," "continue," or, in each case, their negative or variations, and similar words or expressions are used to identify forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking statements.
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This is information that Telefonaktiebolaget LM Ericsson is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 22:30 CEST on August 16, 2024.
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SOURCE Ericsson
FAQ
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