Amdocs Ltd. continued its spending spree last week, agreeing to shell out $375 million to acquire operations support provider Cramer Systems Group Ltd.
Cramer, a privately held, London-based outfit, produces network resource management software for mobile and fixed-line telecommunications companies. The firm boasts more than 80 customers worldwide—including several that are also Amdocs clients—and will form a new division to serve as the “centerpiece” of Amdocs’ OSS business.
Amdocs said the all-cash deal will dilute earnings by 4 cents a share, and the impact on Amdocs’ net earnings will not be known until the agreement is completed.
“Amdocs expects to be well positioned to capitalize on the growth opportunity that OSS represents,” said Dov Baharav, the company’s chief executive officer. “Together, we intend to deliver a complete automated service-fulfillment solution across all lines of business … linking order management at the customer layer with activation at the network layer.
Indeed, Amdocs is rapidly expanding beyond its expertise in billing and customer relationship management in an effort to become a one-stop shop for telecommunications companies, cable TV firms and other subscription-based service providers. The recent move comes on the heels of Amdocs’ $275 million acquisition of Qpass, a Seattle-based digital commerce software developer, and the buyout of Danish firm Stibo Graphic Software for an undisclosed sum.
Amdocs moved into the Chinese market last year with the $30 million acquisition of Longshine Information Technology Co. Ltd., a Beijing-based software developer, and last summer spent $238 million to acquire DST Innovis Inc., which serves cable and satellite TV service providers.
Both the Innovis and the Qpass acquisitions were seemingly hinged on key business relationships, allowing Amdocs to bring its core offerings to entirely new industries.
“The logic behind the Qpass acquisition was (carriers’) needs to move toward gaining more and more revenue from content services,” said Mike Couture, Amdocs’ vice president of marketing solutions. “There had been a real shift in the marketplace from sort of the stop-gap solutions” that had been deployed to offerings that had more long-term efficacy. “It’s the same idea, it’s just a different area of the telecom world,” Couture said.
Investors greeted news of the Cramer acquisition warmly, sending shares of Amdocs up 10 percent. Ovum analyst David Bradshaw agreed, saying the timing is right for an all-inclusive offering for network operators.
“Many carriers are in the process of re-working their core networks to IP standards,” Bradshaw wrote, “and this will almost certainly require them to re-work both their OSS and their billing systems. What could be better than a combined solution from Amdocs/Cramer?”
But operators may not be interested in a one-stop shop, Bradshaw noted, preferring to cherry-pick software and services from a number of providers. Also, carriers aren’t likely to replace all their systems at once, opting instead to gradually deploy new software across their networks. And while converting to IP networks may ease a lack of interoperability between networks and markets, such a conversion surely won’t be painless, Bradshaw noted.
Couture agreed, but noted that network operators are constantly demanding more efficient ways to connect subscribers and manage infrastructure. As wireless collides with Internet, TV and other industries, those demands will only increase.
“In wireless and beyond wireless, there’s a major transformation happening among service providers to deal with new, complex environments; to take advantage of new technologies and new networks,” he said. “Those worlds are really coming together with next-generation networks.”
