Ericsson Sale of MediaKind Stake Delayed; Now Expected to Close at End of 2018

Ericsson has announced that the sale of a majority stake in its Media Solutions Business to One Equity Partners is now expected to be completed around year end instead of Q3 2018, as originally announced on Jan. 31. Under terms of the deal, One Equity Partners will become the majority owner of Ericsson’s Media Solutions business, which has since been rebranded as MediaKind and is developing the business in line with a new business plan.

According to a statement issued this week, the carve-out of MediaKind from Ericsson’s global structure to create a new company, jointly owned with One Equity Partners, is proceeding with great diligence. With employees and customers located all over the world, the establishment of appropriate operating entities is necessary to begin operations as an independent company and to ensure a smooth transition for customers and employees. However, this process has been more complex than originally expected.

The statement also stated that the performance improvement program initiated in 2017 is progressing well and with a strong and focused R&D pipeline, MediaKind is generating momentum with customers. The recent contract with CogecoConnexion for enabling IPTV services based on MediaFirst marks an entry into a new customer segment for the platforms business — cable operators. This has been followed by contracts with Digicel — Papua New Guinea, TotalPlay — Mexico, and TangerineGlobal — United States, all announced in conjunction with IBC 2018. MediaKind Universe — the comprehensive solutions and services portfolio was also launched at IBC2018 with the goal of enabling consumer-centric workflows for modern media.

As communicated in the Q2 2018 earnings release, the divestment of MediaKind is estimated to create additional expenses of SEK -0.3 b. compared to Q2. However, the cost increase is estimated to be equally distributed between Q3 and Q4 and not only impacting Q3 as previously communicated.

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