The multinational networking and telecommunications company, Ericsson, will invest $6.2 billion to acquire Vonage to lead the development of a global network and communication platform for open innovation.

Ericsson's acquisition underscores the company's goal to increase its position in wireless enterprise and widen its worldwide services. Moreover, it will get access to a complimentary, sizable, and high-growth market as a result of Vonage's position in the Communication Platform as a Service (CPaaS) segment.

Vonage, situated in the United States, develops an Application Programming Interface (API), which allows different software to connect.

The firm which works in industries such as healthcare, finance, education, and transportation, had $1.4 billion in revenue in the fiscal year that ended September 30, 2021, with a margin on adjusted profits before interest, tax, and depreciation of 14% and free cash flow of $109 million.

It has 120,000 clients and provides one million developers with access to its API interface, which accounts for 80% of its $1.4 billion in annual revenues.

This purchase follows the Swedish firm's $1.1 billion acquisition of Cradlepoint, a wireless networking business located in the United States, in 2020.

The deal expands on Ericsson's declared intention to expand internationally in the wireless enterprise, providing existing clients with a larger portion of a $700 billion market by 2030.