Ericsson reported its Q3 2023 earnings earlier this week, which weren’t great, and now it’s moving some of its executives around like pieces on a chess board. It’s elevating two leaders of its North American market and tasking one of them to take over its troubled Vonage business.
Niklas Heuveldop, currently senior vice president and head of Market Area North America, is being appointed as CEO of Vonage effective February 1.
Heuveldop obviously did a good job in his role overseeing the North American market because Ericsson announced in December that it had won a $14 billion open RAN contract with AT&T.
Ericsson CEO Boje Ekholm praised Heuveldop in a statement yesterday, saying “Under his leadership we have significantly strengthened our position in North America, expanding our market share with all leading customers in the region, and the industry-defining $14 billion deal with AT&T creates a solid foundation for our business in the market for years to come.”
In February, Heuveldop will be tasked with leading Vonage, which might be a tall order because Ericsson recently announced it was taking a $2.92 billion write-down on the group.
Ericsson originally acquired New Jersey-based Vonage in 2022 for about $6.2 billion. Vonage was a cloud-platform-as-a-service provider (CPaaS).
AvidThink principal analyst Roy Chua said that when Ericsson bought Vonage he and many other analysts scratched their heads because there didn’t seem to be any synergy between a CPaaS and Ericsson’s telecom business. “Regardless, Ericsson purchased it, and they presented it at the time as a communications platform that would help their long-term integration strategy to turn Ericsson into an API-centric telco vendor,” said Chua.
At the time of the acquisition, Vonage had seen more than $1.1 billion in annual revenue with 13% year over year growth between 2020 and 2021.
Ericsson recently took the Vonage impairment charge of $2.92 billion because Vonage has only been seeing 2% year over year growth. “The value of the assets didn’t achieve the growth they were expecting,” said Chua. The impairment write-down was almost half the value Ericsson paid for the company.
Ekholm stated yesterday, “The Vonage business and technology remain key to execute on our strategy to expand in Enterprise and help enable operators to monetize the network features in 5G. We are discussing network APIs and communications solutions with all customers today.”
Fierce asked Chua what the best case scenario would be for Ericsson in terms of Vonage and whether Heuveldop will be able to make a success with it.
He said Ericsson still views network APIs as important, but he hasn’t seen anything that proves Ericsson can effectively monetize APIs in telco networks. He said in order for Heuveldop to be successful he’ll need “Vonage DNA to start showing up across Ericsson.”
In other words, it’s the old problem with telcos and telco vendors needing to modernize and become software-centric, but it goes against their very heart and soul, which is built on hardware and siloes.
“Best case scenario, we see API exposure, more API-ification of Ericsson’s platform,” said Chua. “I’m not certain that’s doable even with leadership.”
Cohen promoted in North America
In other personnel changes announced by Ericsson, the current CEO of Vonage Rory Read will step down from his positions on February 1, and he will leave Ericsson at the end of the first quarter of 2024.
In addition, Yossi Cohen is getting a promotion. Cohen is currently head of Strategy, Technology, Marketing and Business Development for Market Area North America. Effective February 1 he will fill the role being vacated by Heuveldop and become SVP and head of North America. Cohen will also become a member of Ericsson's executive team and report to the CEO.
Ekholm said of Cohen, “He has played an important role within our North American operations for the last seven years, and I’m happy that he has accepted to take on this new role.”