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Ericsson looks to cash in on iconectiv with $2 billion deal

Ericsson reportedly initiated a process to sell US call routing subsidiary iconectiv for between $1.5 billion and $2 billion, in what would be the latest move in the Swedish vendor’s ongoing revival strategy.

Bloomberg reported Ericsson entered into talks with an unnamed financial adviser about divesting iconectiv.

Iconectiv has existed as a brand for seven years. In January 2012 Ericsson acquired OSS and BSS vendor Telcordia for $1 billion. In February 2013, Ericsson announced that Telcordia’s interconnection business, known previously as Telcordia Interconnection Solutions, was to be renamed iconectiv.

This week’s news comes three years after Ericsson sold a 16.7 percent stake in the business to private equity company Francisco Partners for $200 million.

Bloomberg sources said bids of between $1.5 billion to $2 billion could be expected if Ericsson pushes ahead with the sale, with the business attracting interest from several private equity players.

It was not clear if Francisco Partners is one of them.

Since taking control of Ericsson in early 2017, CEO Borje Ekholm has overseen a turnaround, as he moved to slash jobs, increase R&D spend on 5G to refocus on its core radio equipment, along with reorganising and divesting units it acquired in previous attempts to diversify its business.

While potential sale of iconectiv is in line with Ekholm’s long-term strategy, the move could also be prompted by pressure from activist investor Cevian Capital, which has demanded several strategic moves including the divestment of the business, Bloomberg added.

Iconectiv’s website states it uses a cloud-based model and communications platform to develop connectivity solutions for network and operations management, numbering, B2C communications and fraud prevention.

The company has a customer base of more than 5,000, including fixed, mobile and VoIP service providers, alongside cable companies, regulators and enterprises.

―Mobile World Live

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