Ericsson completes Cradlepoint acquisition, bolstering 5G market share
Cradlepoint specializes in cellular connectivity, which Ericsson will leverage in the 5G wars
Ericsson announced its intent to acquire wireless WAN edge 4G and 5G specialist Cradlepoint last month, and it just finalized the roughly $1 billion cash deal today. The Cradlepoint acquisition will help give Ericsson more market share in the 5G enterprise space.
For now, Cradlepoint will continue to operate as a standalone subsidiary of Ericsson and be headquartered in Boise, Idaho. Cradlepoint helps companies connect sites, vehicles, mobile workforces and IoT devices easily and securely via cellular technology.
This will help Ericsson create new revenue streams for its customers by offering 5G-enabled services.
Åsa Tamsons, senior vice president and head of business area Technologies and new businesses at Ericsson, said: "I am very excited to welcome Cradlepoint to the Ericsson family. With Cradlepoint's market-leading solutions, we are strengthening our enterprise offering and taking an important step to lead the next wave of enterprise network transformation.
"Together, we will power solutions to the customer edge that help improve productivity and deliver real-time services, enabling us to drive faster adoption of 5G in enterprise segments. This is good news for our customers as it helps them to accelerate their returns on 5G investments."
Cradlepoint’s sales totaled SEK1.2 billion ($134.7 million) and carried a 61% gross margin. Ericsson expects to lose about 1% on its operating margins in 2021 and 2022. About half of those losses will be due to the amortization of tangible assets included in the acquisition. Cradlepoint will start to contribute operating cash flow in 2022.
Last week, Ericsson signed a deal with BT to provide 5G Radio Access Network (RAN) equipment in London, Edinburgh, Belfast, Cardiff and other major UK cities.
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