Ericsson shares fall after another $1 billion Vonage impairment charge

STOCKHOLM, July 4 (Reuters) – Telecom equipment maker Ericsson (ERICb.ST), opens new tab has recorded another billion-dollar impairment charge for its acquisition of cloud communications firm Vonage in 2021, sending its shares down 2% in early trade.

Dubbed as one of its largest deals in history, Ericsson splurged $6.2 billion in cash to buy Vonage to help it target enterprise customers as it sought to diversify away from its mobile networks business.

Since then, mobile network revenue has fallen due to lower demand for 5G gear, Ericsson’s share price has halved over an Iraq bribing scandal, and it took a $3 billion non-cash charge last year on the Vonage deal.

“Given 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 of 11.4 billion Swedish crowns ($1.1 billion),” said Vonage CEO Niklas Heuveldop, who got the top job in February.