Ericsson is teaming up with several telecom giants, customers of Ericsson, to form a joint company to develop so-called APIs, according to a press release. API is a type of programming interface that is intended to make it easier for users to develop applications, something Ericsson and the telecom operators hope will generate additional revenue.
APIs have existed as a technology for a long time, but the application developers have not understood mobile networks, according to Niklas Heuveldop. This is now supposed to change with a common standard, is the idea.
Ericsson will own 50 percent of the new company, while the telecom operators will jointly own the rest. Among the telecom giants participating in the new company are AT&T, Bharti Airtel, Deutsche Telekom, Orange, Telefonica, T-Mobile, Verizon, and Vodafone.
A milestone, Niklas Heuveldop calls it.
But Ericsson has something to prove.
Last year, Ericsson acquired the cloud service company Vonage, which develops APIs and is partly the basis for today's deal – an acquisition that so far has proven to be a failure. Of the purchase price of 63 billion kronor in 2022, 43 billion have been written off since Ericsson realized that Vonage's value did not live up to expectations.
But Vonage will not directly become part of the new jointly owned company.
It's not the heart of the new company, but an important customer, says Niklas Heuveldop.
And is hopefully going to get Vonage going, which is still struggling with poor or no profitability.
It will absolutely contribute, says Heuveldop.
When will the jointly owned new company become profitable?
Maybe in 3-4 years, hopefully sooner.
