Ericsson inks $1B deal to boost 5G enterprise play

Ericsson struck a deal to acquire Cradlepoint, a US-based wireless solutions specialist, in a move to bolster the Swedish vendor’s strategy to capture a bigger share of the 5G enterprise market.

In a statement, Ericsson said it would pay an enterprise value of $1.1 billion for Cradlepoint, which it has collaborated with since the launch of 4G in the US. The deal is expected to close before the end of Q4, subject to conditions.

Ericsson explained Cradlepoint specialises in wireless WAN edge solutions, connecting through 4G and 5G to deliver “fast, secure and flexible connectivity” for businesses, mobility and critical frontline emergency services.

It operates a subscription model, combining cloud software with hardware endpoints, support and training.

Its sales in 2019 amounted to SEK1.2 billion ($136.7 million) with a gross margin of 61 per cent, and it is “strongly positioned in a market with underlying 25 per cent to 30 per cent growth”, added the Swedish vendor.

For Ericsson, the move builds on an ongoing strategy around offering enterprise services through its 5G portfolio, which includes its Dedicated Networks division and global IoT platform.

Borje Ekholm, Ericsson president and CEO, said Cradlepoint would prove key to its strategy of helping customers “grow the value of their 5G network investments”.

“Combining the scale of our market access and established relationships with the world’s biggest mobile operators we are making a strong investment to support our customers to grow in this exciting market.”

Once the deal is complete, Cradlepoint will be part of Ericsson Business Area Technologies and New Businesses, and is expected to contribute to operating cash flow in 2022.

Cradlepoint operates a R&D centre in Silicon Valley, has offices in the UK and Australia, and more than 650 employees which will remain at the company.

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