Ericsson CEO Borje Ekholm has defended the company’s purchase of Vonage, despite a major writedown on the company affecting its 2Q results for 2024. CEO Borje Ekholm told an analyst call that the unit has under-performed and needs to be managed better, but said the “strategic rationale” for the acquisition remains.
Network API platforms can create new ways to monetise network capabilities and features, Ekholm said, and he described enabling the business model around Network APIs as the “north star” for the company and the industry.
“Long term we see this to be crucial for the telecom industry – and actually if we cannot generate the extra revenues it is very hard to justify future investments as well. So my view is that this is a critical initiative for us and the industry. Network APIs and the global platform we are creating remain central to this strategy and we continue to see good traction. We signed two operator partnerships in Q2 and are now at 12 in total.”
Ekholm said that Ericsson has continued to invest in R&D, including in the Global Network Platform, the name Ericsson gives to the Network API developer platform.
“The Global Network Platform is the strategic reason we acquired Vonage and that’s what are are actually investing in. What we are trying to do, still the north star, is to build a new marketplace for network APIs. When we talk about it, it becomes technical language, but think about having 3D positioning, new ways of authenticating devices, speed-on-demand with millisecond latency for broadcasters. A number of these things are starting to be implemented. That’s a new way for industry to drive new types of revenue sources it has not had.”
Ekholm said the existing “paradigm” that relies on monthly subs for mobile broadband has to change.
“Operators who have rolled out 5G typically have a bit higher ARPUand lower costs and see some gross margin expansion, but that’s not a new investment case. We can see with network APIs that there is an investment case. That is what we are focussed on.”
The Ericsson execs would not be drawn on when the Vonage assets, including the API platform, would be profitable.
“Of course creating a market, new monetisaiton models and associated ecosystem will take time but we are seeing some very good traction,” Ekholm said.
One area in its enterprise business that also shows promise, according to Ericsson, is its dedicated networks busisness – with several wins for Private Network enteprise networks as well as for its Wireless LAN business.
“It has been experimental so far on dedicated networks but we area seeing that increasingly pick up, with interesting customer wins. That is an emerging market as well and will also require more time before we see contributions in the P&L,” Ekholm added.