Ericsson, the Swedish maker of telecommunications equipment, has agreed to buy Microsoft's Mediaroom business, which makes the software that powers AT&T's U-Verse TV service.
Neither company said how much Ericsson will pay for the acquisition.
Mediaroom gives phone companies a way to provide cable-like TV services over phone lines. It's used in 22 million set-top boxes in 11 million households, Microsoft said.
U-Verse accounts for about 4.5 million of those homes. It's also used by Deutsche Telekom of Germany and by Telus Communications of Canada.
Microsoft, which is based in Redmond, Washington, said it's focusing its resources on making its Xbox service a delivery vehicle for entertainment to game consoles, phones, PCs and tablets.
Ericsson said the Mediaroom business complements its portfolio of TV products. The business employs more than 400 people and is based in Mountain View, California.
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