Ericsson (NASDAQ: ERIC.US) will sell its U.S. call routing business to Koch for $10 billion.
Telecom equipment maker Ericsson (ERIC.US) has agreed to sell its US call routing business, Iconectiv, to a private equity arm of Koch Inc. for $1bn.
Ericsson is expected to receive about SEK10bn (about $1bn) in cash, after tax, transaction costs and other liabilities, as part of Koch Equity Development’s acquisition, according to a statement from the company late on Friday.
Ericsson has been trying to cut costs and boost margins to cope with the challenging telecoms equipment market, which has been hit by a lack of expected spending on 5G technology, alongside its Nordic rival Nokia (NOK.US).
Ericsson began selling Iconectiv in 2020, according to earlier reports, when the business was valued between SEK15bn and SEK20bn.
Koch is a sprawling conglomerate known for its oil refineries and chemical plants, and has long been a major investor in technology and growth stocks. Last year, Koch Equity Development acquired the remaining stake in cloud software maker Infor Inc. for $11bn, valuing Infor at about $13bn, including preferred shares.
According to Ericsson’s statement and its website, based in Bridgewater, New Jersey, Iconectiv provides communications solutions to more than 5,000 companies, including telecoms companies and government agencies. The website shows it also offers number portability solutions, allowing users to keep their numbers when they switch providers, and works with customers including AT&T (T.US) and Verizon (VZ.US).