Ericsson reports it has agreed to buy U.S.-based wireless networking company Cradlepoint in a $1.1 billion deal, as part of plans to expand its 5G-related products for business customers.
“We think this will give our customers a chance to generate new income sources within the enterprise segment,” Ericsson finance chief Carl Mellander told Reuters.
Ericsson plans to sell Cradlepoint products to its mobile operator customers, who can create new revenue streams by selling it to their business clientsCradlepoint, which will become a subsidiary of Ericsson, sells routers and subscription-based wireless networking service.
“The acquisition is expensive, but the price tag is tolerable given high underlying growth rates and Ericsson’s potential for revenue expansion in the enterprise market,” said Societe Generale analyst Aleksander Peterc.
While Cradlepoint has mostly focused on the U.S. market, Ericsson aims to take the products outside North America and plans to keep it as a standalone business with its own sales team.
“Where we have struggled in the past is when we have started to integrate on the sales side. That’s when you lose track of all your go-to-market channels and customer interactions,” said Ericsson CEO Borje Ekholm.