Ericsson agreed to sell its IoT Accelerator and Connected Vehicle Cloud businesses to Aeris Communications. The Swedish company has only been able to take a limited part of the value chain, resulting in lower returns on investment.
The vendor explained it would transfer the businesses and related assets to IoT specialist Aeris, making it the market leader in the segment with strong synergies to create products for enterprises and new revenue streams for CSPs. Ericsson expects the deal to close in the first quarter of 2023, including the transfer of its IoT employees to Aeris. In addition, Ericsson plans to support Aeris with transition services and will acquire a small stake in the company.
The IoT Accelerator is used by more than 9,000 enterprises to manage over 95 million connected devices with 22 million eSIM connections globally, said Ericsson. Meanwhile, the vendor claims that its Connected Vehicle Cloud business is the most-connected car platform on the market today, with automotive IoT players using it to connect 6 million vehicles across 180 countries.
Ericsson explained it decided to sell the IoT business, which has a forecast of net sales of SEK800 million ($76.8 million) in 2022, due to it being the key driver of losses in the Business Area Technologies and New Businesses in the enterprise sector. It said the transaction will eliminate quarterly losses of SEK250 million, although warned the divestment would lead to a negative one-time impact of SEK1.1 billion in its next quarterly results.
“Ericsson made significant investments to address the fragmentation of the IoT market but it was only able to tap into a limited part of the segment, limiting the returns of such investment,“ said Asa Tamsons, head of Business Area Technologies and New Businesses at Ericsson. “The combined business will offer an unparalleled IoT platform for enterprises and new revenue streams for communication service providers, ultimately benefiting Ericsson’s customers. Aeris is a good home for our IoT business.“
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