Ericsson has finalized a significant transaction, valued at $1 billion, involving the sale of a US-based business entity to a division of Koch Industries.

Ericsson AB, a Swedish manufacturer of telecommunications equipment, has finalized a $1 billion agreement to divest its US call-routing subsidiary, Iconectiv, to a private investment division of Koch Industries Inc.

The company anticipates receiving approximately 10.6 billion kronor ($1 billion) in cash after accounting for taxes, transaction costs, and other obligations related to the acquisition by Koch Equity Development, as stated in a press release issued late Friday.

The transaction is projected to be completed in the first half of 2025, yielding one-time earnings of around 8.8 billion kronor. In light of a challenging telecommunications equipment market, Ericsson has been actively pursuing cost reductions and margin enhancements.

The firm, alongside its Nordic rival Nokia Oyj, has faced persistent low demand, as the expected investments in 5G technology have not materialized.

Reports from Bloomberg News indicated that Ericsson initiated the sales process for Iconectiv in 2020, with the unit's valuation estimated between $1.5 billion and $2 billion at that time.

Koch Industries, a vast conglomerate recognized primarily for its refineries and chemical manufacturing, has a long-standing history of investing in technology and growth equity.

In 2020, Koch Equity Development acquired the remaining shares of cloud-software company Infor Inc., valuing the firm at $11 billion, or nearly $13 billion when including preferred shares.

Based in Bridgewater, New Jersey, Iconectiv offers communication solutions to over 5,000 clients, including telecommunications firms and government entities, as detailed in Ericsson's statement and the company's website.

Additionally, Iconectiv provides numbering solutions that enable users to retain their phone numbers when changing service providers, having collaborated with clients such as AT&T Inc. and Verizon Communications Inc., as indicated on its website.