In the most recent round of billing company mergers and acquisitions, LHS Group Inc. will acquire InfoCellular Inc., and Intertech and International Billing Services said they will work together to supply mutual customers one-stop shopping for billing and customer care.
The events follow recent acquisitions by Saville Systems plc and Billing Information Concepts. According to Michael Agarwala, telecom software analyst at UBS Securities, the growing billing software industry can expect additional acquisitions by billing companies looking to broaden their service offerings.
“There is a lot of that activity now, and my sense is that there is going to be more of that activity going forward,” he said.
Agarwala defined several reasons for this trend.
“One is that the companies may want to broaden their product reach; to get into another segment of the billing space or another price point in the billing space” that they didn’t have before, he explained.
Carriers have become more receptive to third-party products. Also, carriers are broadening their own offerings in favor of bundled services and need billing solutions for those services. A company that can offer a one-stop shop of billing solutions is preferable.
Gerald Belson, an analyst at Deloitte & Touche Consulting Group Inc., said to expect mergers by companies with complementary service offerings, but not to look for billing companies with overlapping capabilities to merge.
For instance, Intertech customers now will have access to IBS’ billing statements, which are designed to be easy to read, and IBS customers will have access to Intertech’s billing and customer-care software. Using the companies’ products, service providers will be able to get their back-office functions up and running more quickly and bring services to market at an accelerated rate, said the companies.
LHS, which provides convergent client/server modular customer-care and billing software and services for the telecom industry, said it agreed to shell out $9.5 million of its stock to gain InfoCellular’s leading point-of-sale software solution to expand its current billing and customer-care products.
“Many of our customers have asked LHS to provide them with a point-of-sale solution. We believe InfoCellular’s focus on providing best-of-breed customer acquisition and retention solutions fits extremely well with LHS’ strategy of expanding its billing and customer-care platform,” said Bruce Leonard, president and chief operating officer of LHS.
Analysts have identified North America as the biggest market for billing and customer-care systems. The many start-up wireless carriers entering the personal communications services market are thought to be the main force behind this.
The focus also is on the larger, more established carriers upgrading their legacy computer systems with the new bundled telecom offerings now popular with customers and carriers alike. Effective billing systems are a major weapon in the war against churn.
“The industry can support more consolidation,” Agarwala said. “Nobody has a billing solution that satisfies all the issues in the billing world.”
