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Layoffs at Ericsson's iconectiv

Ray Le Maistre
8/10/2018
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Ericsson's iconectiv unit, formerly known as Telcordia Interconnection Solutions, is the latest part of the Swedish giant's empire to be hit by job cuts, according to industry sources.

Ericsson AB (Nasdaq: ERIC) has been reducing its headcount significantly during the past couple of years, by laying off staff (more than 20,000) and offloading non-core units, as it seeks to return to profitability. (See Ericsson Back in Profit After Fierce Cuts & 5G Action and Ericsson Offloads 700-Strong Field Service Biz.)

Now, it seems, iconectiv, which is believed to employ between 400 and 500 staff and which "provides interconnection solutions that include network and operations management, numbering, registry, security and identity, and messaging solutions," is taking a hit only months after it took full control of critical number portability operations in the US.

Industry sources in New Jersey with knowledge of the matter informed Light Reading that some layoffs were announced Wednesday.

According to the sources, about 75 members of the Number Portability Administration Center (NPAC) development team were affected by the iconectiv downsizing.

In the broader picture of the Ericsson restructuring that isn't a large number, but it is believed to be about 40% of the NPAC development team and more than 15% of iconectiv's total headcount. That's significant for a company that is now responsible for nationwide US number portability and for enabling law enforcement and emergency response services.

In response to questions from Light Reading, iconectiv opted not to comment on how many staff were impacted, which part(s) of the business were impacted or how many staff remain. It did state the following: "In May we successfully transitioned the U.S. Number Portability Administration Center (NPAC) the largest system of databases of ported telephone numbers in the world. As with any project of this magnitude, as you move from development to operations the business needs shift as well. As any company does, we consistently evaluate our resources to ensure alignment with our strategic priorities and project deliverables. All resource and staffing decisions are evaluated with those considerations in mind."

There have also been suggestions in recent weeks that Ericsson is looking to sell iconectiv, in which Francisco Partners holds a minority stake: The private equity firm acquired 16.7% of the company in March 2017 in return for a $200 million investment. (See Francisco Partners Invests in Ericsson's iconectiv.)

Ericsson declined to comment on that speculation.


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Ericsson renamed Bridgewater, New Jersey-based Telcordia Interconnection Solutions as iconectiv in February 2013, and the business is currently part of Ericsson's 'Segment Other' operations that also includes the recently renamed and about-to-be offloaded Media Solutions unit, Red Bee Media and its Emerging Business unit (mainly focused on IoT opportunities). (See Ericsson Rebadges Media Unit, Eyes Smart Cities, M&A.)

iconectiv is best known as the Local Number Portability Administrator (LNPA) in the US, a role it won in 2015 from Neustar but only recently took on completely following a lengthy transition period. FCC chairman Ajit Pai noted in a press statement on May 29 this year that "after years of hard work and extensive preparation, we have successfully transitioned to a new and less expensive LNPA."

As part of Ericsson's new strategy implemented in early 2017, iconectiv is set up to run "like an in-house startup… with clear financial targets and with regular review of business performance compared to target milestones." Ericsson doesn't break out financials for iconectiv but noted in its most recent annual report that iconectiv's sales increased year-on-year in 2017.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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James_B_Crawshaw
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James_B_Crawshaw,
User Rank: Blogger
8/13/2018 | 6:53:07 PM
Valuation
Ericsson market cap per employee = $269,000

iconectiv valuation per Francisco stake = $200m/16.7% = $1.2bn

employees = 450

inconectiv value per employee = $2.67m

Not the first place I'd expect layoffs. 
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