Ericsson announced a strategic divestment of its U.S. subsidiary, iconectiv, to Koch Equity Development. Acquired by Ericsson in 2012 through the Telcordia acquisition, iconectiv specializes in network number portability and data exchange services. The sale is expected to provide Ericsson with a cash benefit of approximately SEK 10.6 billion (USD 1.0 billion) after accounting for taxes and transaction costs. The deal, which will require regulatory approvals, is anticipated to close in the first half of 2025.
The transaction will also result in a one-off EBIT benefit of around SEK 8.8 billion (USD 0.8 billion) for Ericsson. Iconectiv, which has been co-owned by private equity firm Francisco Partners since 2017, contributed SEK 1.0 billion (USD 0.1 billion) to Ericsson’s net income in 2023. The divestment aligns with Ericsson’s strategy to streamline its operations and focus on its core business areas.
Under its new ownership, iconectiv is expected to continue its growth trajectory. The move will allow the company to further develop its number portability and network services offerings without the strategic constraints of its previous parent company. Ericsson’s decision reflects its ongoing efforts to optimize its portfolio and enhance shareholder value.
Key Points:
- Ericsson is selling iconectiv to Koch Equity Development LLC.
- The sale will generate approximately SEK 10.6 billion (USD 1.0 billion) in cash for Ericsson.
- A one-off EBIT benefit of SEK 8.8 billion (USD 0.8 billion) is anticipated upon transaction closure.
- The transaction is subject to regulatory approval and expected to complete in the first half of 2025.
- Iconectiv has been a part of Ericsson since 2012 and has co-ownership with Francisco Partners since 2017.
“By divesting iconectiv, we are enabling the company to pursue its growth ambitions under new ownership while streamlining our focus on core areas,” said Börje Ekholm, CEO of Ericsson.
- iconectiv, which is based in Bridgewater, New Jersey, was founded as Bellcore in 1984. The company changed its name to Telcordia in 1999.
- iconectiv is known as the global leader in providing numbering solutions and previously designated by the U.S. Federal Communications Commission to serve as the Local Number Portability Administrator in the U.S.
- In 2012, Ericsson acquired Telcordia for $1.5 billion in cash from Providence Equity Partners and Warburg Pincus.
- In 2017, Francisco Partners invested US$200 million to acquire a 16.7% ownership in iconectiv, an independent subsidiary owned by Ericsson that develops connectivity solutions used by more than 1,200 service providers, regulators, enterprises, and content providers worldwide.