& cplSiteName &

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
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.