Ericsson offloads its IoT Accelerator unit

• Ericsson is selling its IoT Accelerator and Connected Vehicle Cloud business
• The buyer is California-based IoT specialist Aeris Communications
• Ericsson says the move will improve the financials of its Enterprise unit

Ericsson is selling its IoT Accelerator and Connected Vehicle Cloud business to San Jose, California-based enterprise IoT specialist Aeris Communications for an undisclosed sum in a move the giant telecom vendor says will improve the financials of its recently formed Enterprise division. 

The vendor launched IoT Accelerator in 2016 as a cloud-based software-as-a-service (SaaS) platform that enabled telcos and enterprises to manage their IoT assets, with specific capabilities designed for certain industry verticals, such as transport and energy. It is currently used by more than 9,000 enterprises to manage over 95 million connected devices, boasts 22 million eSIM connections globally, and has 35 network operator partners hooked up to the platform to provide international IoT connectivity to enterprise users.  

The Connected Vehicle Cloud meanwhile is, according to Ericsson, “the most complete connected car platform on the market today, with frontrunners in automotive IoT using it to connect 6 million vehicles” in 180 countries. 

The business is on course to generate revenues of 800m Swedish krona (SEK) ($77m) this year but report a loss of SEK1bn ($96m), based on its current quarterly losses of SEK250m ($24m). “The IoT business… has been the key driver of the losses in Business Area Technologies and New Businesses in the Enterprise segment,” noted Ericsson in its announcement about the divestiture.

And it will cost the vendor more to offload the business, as the giant Swedish company says the cost of sealing the deal, including “portfolio optimisations”, will result in a one-time operating charge of SEK1.1bn that will be recorded in its fourth-quarter results. 

Ericsson says the deal, which is due to be completed in the first quarter of 2023, “includes the transfer of Ericsson’s assets and employees in its IoT business to Aeris. In addition, Ericsson intends to support Aeris with transition services and will acquire a small stake in the company.” 

Aeris has been in the enterprise connectivity and IoT game for more than 20 years. “Aeris’ Intelligent IoT Network, targeting industry verticals such as transportation, energy, automotive and healthcare, gives communications service providers the opportunity to monetise new services on top of connectivity enabled by the IoT Accelerator,” noted Ericsson. “ The company has already teamed up with several leading communication service providers including Softbank, AT&T, T-Mobile, and Vodafone, and is also working with leading automotive original equipment manufacturers,” it added.  

Together, Aeris’ and Ericsson’s IoT platforms will connect more than 100 million IoT devices worldwide, covering 190 countries, and have 9,400 enterprise customers. For telcos, “the transaction of Ericsson’s IoT businesses to Aeris will result in a strong partner that continues to provide their customers with a leading IoT connectivity platform, while also offering new value-added services to help grow IoT revenue streams,” noted Ericsson.

The Swedish vendor sees its Enterprise division, formed in May this year, as a key driver of new growth for the company. Its main assets are indoor/private wireless infrastructure specialist Cradlepoint, which was acquired for $1.1bn, and cloud-based communications platform specialist Vonage, acquired recently for $6.2bn. 

In the third quarter of this year, the Enterprise division reported revenues of SEK5.2bn ($500m) and an operating loss of SEK1.7bn ($163m). Offloading the IoT business will not hit the top line of the division too much but it will certainly help the bottom line.

- Ray Le Maistre, Editorial Director, TelecomTV