According to the Zhītōng Cáijīng APP, telecommunications equipment manufacturer LM Ericsson (ERIC.US) stated that it will incur SEK 11.4 billion (approximately $1.09 billion) in non-cash impairment expenses in the second quarter of 2024. This is the second write-down the company has made since acquiring cloud communications company Vonage.

It is reported that LM Ericsson spent $6.2 billion in cash to acquire Vonage, which is said to be one of the largest deals in the company's history. This move was aimed at targeting enterprise customers and seeking diversification from mobile network business.

Since then, due to a decrease in demand for 5G equipment and a drop in mobile network revenues, LM Ericsson's stock price has fallen by half due to the Iraq bribery scandal. Last year, the company recorded non-cash impairment expenses of $3 billion in the Vonage deal.

Vonage CEO Niklas Heuveldop said: "Given the deteriorating market environment and the selective decisions we have made to refocus investment priorities on strategic priorities, we have re-evaluated certain growth assumptions, resulting in a SEK 11.4 billion non-cash impairment."

Vonage is an independent department of LM Ericsson. LM Ericsson had expected that Vonage would increase EPS and free cash flow per share from 2024 onwards, but so far, the company has written down $4 billion, equivalent to two-thirds of the acquisition price.

LM Ericsson purchased Vonage's outstanding shares for $21 each, a 28% premium over the previous closing price and a 34% premium over the average price of the past three months. Analysts at the time believed this was a high price.

"This confirms the claim that LM Ericsson paid too high a price for the department in 2021," said Mads Lindegaard Rosendal, an analyst at Danske Bank Credit Research.