Vonage was founded a couple of decades ago as a pioneer of internet-based telephone service, and it has evolved into a platform for application programming interfaces that allow different software applications to communicate with each other.
The acquisition will give Ericsson access to software developers who can create new applications to take advantage of features built into Ericsson's new fifth generation high speed wireless networks.
Borje Ekholm, CEO of the company, said the deal is the next step in delivering Ericsson's strategic goal of developing leading mobile networks.
He said that Vonage will give us a platform to help our customers monetize their investments in the network, benefitting developers and businesses.
Ericsson agreed to buy Vonage for $21 per share, which is 28 percent higher than Vonage's closing share price on Friday.
The deal is expected to close in the first half of 2022.