Ericsson, according to a Bloomberg report, is looking to offload Iconectiv, a US-based unit that provides various communications services, including numbering and fraud prevention.
Activist investor Cevian Capital, which holds a 7.4% stake in Ericsson (after recently trimming down its shareholding from 8.4%) has apparently tried to push through the divestment. Talks with potential bidders, via an unnamed advisor hired by Ericsson, are reportedly underway.
According to "people familiar with the matter," several private equity firms are in the frame. The price tag for Iconectiv, said one Bloomberg source, is between $1.5 billion and $2 billion.
It's difficult to determine how well (or not) Iconectiv is doing – there are no breakout figures – but it's clearly not a core business for the Swedish manufacturer.
The unit sits within Ericsson's "Emerging Business and Other" segment, alongside IoT and its media businesses. These include Red Bee Media (formerly Broadcast Services) and a 49% ownership in MediaKind (formerly Media Solutions).
In 2019, "Emerging Business and Other" accounted for only 3% of Ericsson's net sales. According to Ericsson's 2019 Annual Report, however, the division's sales – adjusted for comparable units and currency – increased by 14%. The rise, said Ericsson, was "driven by growth in the Iconectiv business through a multi-year number portability contract in the US."
Iconectiv came into the Ericsson fold after the 2012 purchase of OSS/BSS specialist Telcordia (Iconectiv is a subsequent rebrand). The price tag was more than $1 billion. In 2017, California-based private equity firm Francisco Partners snapped up 16.7% of the Iconectiv business for $200 million. Francisco Partners, it seems fair to speculate, may well be among the private equity suitors.
Iconectiv says it has more than 5,000 companies worldwide on its books, which serve 2 billion customers daily.
Ericsson said it does not comment on rumors and speculation when approached by Light Reading.
— Ken Wieland, contributing editor, special to Light Reading