Ericsson struck a deal to sell its IoT Accelerator and Connected Vehicle Cloud businesses to Aeris Communications for an undisclosed sum, with the vendor stating it had only been able to tap into a limited part of the value chain, resulting in lower returns on investment.
The vendor explained it would transfer the businesses and related assets to IoT specialist Aeris, making it the market leader in the segment with strong synergies to create products for enterprises and new revenue streams for CSPs.
Ericsson expects the deal to close in Q1 2023, including the transfer of its IoT employees to Aeris.
In addition, Ericsson plans to support Aeris with transition services and will acquire a small stake in the company.
The IoT Accelerator is used by more than 9,000 enterprises to manage in excess of 95 million connected devices with 22 million eSIM connections globally, said Ericsson.
Meanwhile, its Connected Vehicle Cloud business “is the most-connected car platform on the market today”, with automotive IoT players using it to connect 6 million vehicles across 180 countries.
Loss driver
Ericsson explained it decided to sell the IoT business, which has a forecast of net sales of SEK800 million ($76.8 million) in 2022, due to it being the “key driver of losses” in the Business Area Technologies and New Businesses in the enterprise sector.
It said the transaction will eliminate quarterly losses of SEK250 million, although warned the divestment would lead to a negative one-time impact of SEK1.1 billion in its next quarterly results.
Asa Tamsons, head of Business Area Technologies and New Businesses at Ericsson, added the company had made “significant investments to address the fragmentation of the IoT market”, but it was only able to tap into a limited part of the segment, “limiting the returns of such investment”.
“The combined business will offer an unparalleled IoT platform for enterprises and new revenue streams for communication service providers, ultimately benefiting Ericsson’s customers. Aeris is a good home for our IoT business,” she said.
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