Ericsson will book a non-cash impairment of SEK11.4 billion ($1.1 billion) in its upcoming Q2 results mostly related to the Vonage cloud business it acquired in 2022. The charge comes nine months after it took a hit of $2.9 billion on the unit's value.
The vendor noted the latest charge on Vonage intangible assets reflected lower anticipated market growth in some of the division’s current portfolio. It will be booked in results scheduled to be announced next week.
“Given the 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, resulting in a non-cash impairment,” explained Vonage CEO and Ericsson head of business area Global Communications Platform Niklas Heuveldop.
Despite this second sizeable write-down attributed to the unit within a year, Ericsson is standing by its strategy to build a new source of monetization for the telecom industry, with Vonage as a key. “Vonage is positioned at the center of digitalizing enterprises and society through the development of the Global Network Platform for network APIs,” the company added, noting its platform had already signed 12 service provider partnerships.
Ericsson completed the purchase of Vonage in 2022 for $6.2 billion. Last year’s impairment of $2.9 billion was attributed to the significant drop in the market capitalization of Vonage’s publicly traded peers, increased interest rates, and overall slowdown in Vonage’s core markets.
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