Swedish operator, Ericsson, announced that it will report a non-cash impairment charge totaling SEK 11.4 billion (USD $1.1 billion) in its forthcoming Q2 financial results.
This impairment primarily pertains to the Vonage cloud business acquired in 2022. Notably, this charge follows a previous impairment of USD $2.9 billion recorded on the same unit nine months ago.
The vendor attributed the recent impairment of Vonage’s intangible assets to reduced anticipated market growth within certain segments of the division’s current portfolio. This charge is set to be included in the results scheduled for announcement next week.
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In an official statement, Niklas Heuveldop, CEO of Vonage and Hhead of Bbusiness Aarea Global Communications Platform at Ericsson, clarified that due to changes in the market landscape and strategic shifts in investment priorities, they have reevaluated their growth projections. This reassessment has led to a non-cash impairment charge.
Even afterDespite this second significant depreciation linked to the unit within twelve months, Ericsson remains committed to its strategy of creating a new revenue stream for the telecom industry, viewing the acquisition of Vonage as integral to this endeavor.
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“Vonage is positioned at the centerre of digitalizsing enterprises and society through the development of the Global Network Platform for network APIs,” the company added, highlighting that its platform had already inked 12 service provider partnerships.
In 2022, Ericsson acquired Vonage for USD $6.2 billion. The impairment of USD $2.9 billion recorded last year was explained bycan be attributed to factors such as a notable decline in the market value of Vonage’s publicly traded competitors, rising interest rates, and a general slowdown in Vonage’s primary markets.
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