Swedish telecom-equipment manufacturer Ericsson AB has finalized a $1 billion agreement to divest its US call-routing business, Iconectiv, to a private investment arm of Koch Inc. After accounting for taxes, transaction costs, and other liabilities, Ericsson anticipates receiving approximately 10.6 billion kronor ($1 billion) in cash as a result of the acquisition by Koch Equity Development. The transaction is scheduled to be completed in the first half of 2025 and is expected to generate one-time earnings of around 8.8 billion kronor.
Facing challenges in the telecom-equipment market, Ericsson has been focused on cost reduction and margin enhancement. Alongside its Nordic rival, Nokia Oyj, the company has grappled with weak demand due to the delayed implementation of 5G technology investments.
Initiated in 2020, the sales process for Iconectiv was rumored to value the unit at approximately $1.5 billion to $2 billion. Koch Inc., a diversified conglomerate recognized for its presence in refineries and chemical plants, has a history of significant investments in technology and growth equity. In a previous transaction, Koch Equity Development acquired the remaining shares of cloud-software manufacturer Infor Inc., valuing the company at $11 billion, or close to $13 billion when factoring in preferred shares.
Located in Bridgewater, New Jersey, Iconectiv delivers communication solutions to over 5,000 clients, including telecommunications firms and governmental agencies. The company also offers numbering solutions, enabling users to retain their phone numbers when switching service providers. Notable clients of Iconectiv include AT&T Inc. and Verizon Communications Inc.
(Note: The name of Koch Inc. was correctly stated in the first paragraph as per the update effective August 1.)
