Swedish telecommunications equipment maker Ericsson AB reached a US$1 billion deal to sell its US call-routing business Iconectiv to a private investment arm of Koch Industries Inc.

Ericsson expects to get about US$1 billion in cash after taxes, transaction expenses and other liabilities as part of the takeover by Koch Equity Development, the company said in a statement late on Friday. The deal is expected to close in the first half of 2025, and result in one-time earnings of about 8.8 billion kronor . 

Ericsson has been working to cut costs and improve margins in a challenging telecommunications-equipment market. The company, along with its Nordic competitor Nokia Oyj, has been struggling with dismal demand for years as anticipated spending on 5G technology failed to materialise. 

Ericsson had begun a sales process for Iconectiv in 2020, Bloomberg News reported at the time. The unit was expected to be valued at about US$1.5 billion to US$2 billion then. 

Koch Industries, a sprawling conglomerate that’s best known for its refineries and chemical plants, has long been a huge investor in technology and growth equity. In 2020, Koch Equity Development bought the rest of cloud-software maker Infor Inc that Koch Industries didn’t already own in a deal that valued the firm at US$11 billion, or nearly US$13 billion including preferred shares. 

Bridgewater, New Jersey-based Iconectiv provides communications solutions to more than 5,000 customers, including telecommunications companies and government agencies, according to Ericsson’s statement and the company’s website. It also provides numbering solutions, which allow users to keep their numbers when switching providers, and has worked with clients including AT&T Inc and Verizon Communications Inc, the website showed. 

  - Bloomberg