Light Reading

Amdocs Buys Into Content Delivery

Ray Le Maistre
4/18/2006
50%
50%

Billing systems giant Amdocs Ltd. (NYSE: DOX) is buying content download system vendor Qpass Inc. for $275 million in cash, a move that further highlights the growing importance to the telecom services world of content delivery platforms. (See Amdocs to Buy Qpass.)

Qpass is a supplier of software that enables wireless operators such as Cingular Wireless , Sprint Corp. (NYSE: S), and T-Mobile International AG to sell and deliver digital content, such as ringtones and games, to their customers. It also provides a managed service for carriers and acts as a services strategy consultant for telecom operators and content owners such as Sony Corp. (NYSE: SNE), ESPN, and HBO.

Such systems have long been important to mobile carriers, but with fixed-line operators keen to find ways of increasing revenues from their broadband customers, digital content delivery capabilities are quickly becoming relevant to a wider customer base, with VOIP specialist Skype Ltd. a recent example. Skype is using Qpass to sell "original pictures, sounds, and ringtones" as part of its new Personalise Skype service. (See Skype Launches New Version.)

The move pitches Amdocs squarely up against VeriSign Inc. (Nasdaq: VRSN), which made two acquisitions in the content delivery sector during March. (See VeriSign Acquires M-Qube and VeriSign to Buy Kontiki.)

On a conference call today, Qpass's CEO and founder, Chase Franklin, said his company's technology has enabled 480 million transactions worth $1.2 billion in total. He noted that, while ringtones still dominate the download sector, they only account for about 50 percent of current transactions handled by Qpass's technology, with games accounting for about 19 percent, graphics (such as screen savers) about 15 percent, and videos to mobile phones already accounting for about 2 percent.

Amdocs believes there's plenty more to come. The billing and CRM giant believes there is massive growth in the digital download market and reckons the market can grow from being worth $15 billion in 2005 to as much as $70 billion in 2009 as fixed and cable operators find they need such systems.

That's why it's prepared to pay more than six times revenues for Qpass, which generated $42 million in sales in 2005. That's growing though, with Amdocs saying the current quarterly run rate is at $12 million to $15 million. While the companies didn't discuss Qpass's profitability, Merrill Lynch & Co. Inc. analyst Tal "Too Tal" Liani estimates that Qpass lost between $5 million and $7 million in 2005.

The acquisition is expected to be dilutive by $0.01 or $0.02 in the current fiscal year, which ends in September, and accretive thereafter, and is expected to close before the end of June 2006. It's unclear how many of Qpass's 300 staff will be retained.

The move pleased investors, with Amdocs's share price edging up 25 cents, (8.3%), to $3.25 in pre-market trading this morning.

The deal will have also pleased Qpass investors such as Oak Investment Partners , Venrock Associates , and SeaPoint Ventures , and others, which have pumped more than $38 million into the firm.

And if there's any truth behind a recent posting on John Cook's Venture Blog, the purchase price may have been hiked up by rival bids from other interested parties, including Verisign, Openwave Systems Inc. (Nasdaq: OPWV), and Lucent Technologies Inc. (NYSE: LU).

Amdocs declined to comment on whether it had been involved in a competitive bidding process, while Qpass spokespeople were unavailable.

— Ray Le Maistre, International News Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 3:56:54 AM
re: Amdocs Buys Into Content Delivery
If it's correct that Lucent was among the other companies interested in Qpass, maybe it should have bid higher. There are surely decent margins to be had here, and Amdocs is an aggressive company that's used to winning. One to watch.
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
Then pick up your axe, put on your spandex trousers and get yourself down to Light Reading's Big Telecom Event (BTE). Kerrang!!!
LRTV Custom TV
Meeting the Demands of Bandwidth & Service Group Growth

5|1|15   |   5:35   |   (0) comments


Jorge Salinger, Comcast's Vice President of Access Architecture, explains how DOCSIS 3.1 and multi-service CCAP can meet the demands of the bandwidth and service group growth.
LRTV Custom TV
DOCSIS 3.1: Transforming Cable From Hardware-Defined Network to Software-Defined Network

4|29|15   |   03:48   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explains how DOCSIS 3.1 can transform cable HFC network to a more agile software-defined network.
LRTV Huawei Video Resource Center
Predicting Traffic Patterns for Quality Mobile Broadband

4|29|15   |   6:45   |   (0) comments


Accessing information ubiquitously creates complexity and creates heavy traffic onto the network, especially at large-scale events like sporting events or festivals. In this video, Huawei's Mohammad Hussain speaks to experts about how to predict traffic and improve user experience during periods of heavy traffic.
Between the CEOs
Ciena CEO: The Web-Scale Revolution

4|28|15   |   10:32   |   (3) comments


Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
LRTV Documentaries
Cox Eyes Cloud-Based Home Networks

4|27|15   |   05:30   |   (0) comments


Cox's Jeff Finkelstein explains how moving services to the cloud will let cable deliver services faster and eliminate constant hardware replacements.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Eurobites: Nokia Quashes Handsets Rumor
Paul Rainford, Assistant Editor, Europe, 4/28/2015
Verizon Builds Key Vendors Into SDN Strategy
Carol Wilson, Editor-at-large, 4/28/2015
Why Is Verizon Fighting With Programmers?
Alan Breznick, Cable/Video Practice Leader, 4/28/2015
Astellia Highlights Customer Care Disconnect
Ray Le Maistre, Editor-in-chief, 4/29/2015
T-Mobile Beats Sprint on Subs, Eyes Verizon on Network
Sarah Thomas, Editorial Operations Director, 4/28/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Cats with Phones
Working With What You've Got Click Here
"It's pretty hard to answer these things without thumbs!"