Light Reading

NEC to Buy Convergys Unit for $449M

Ray Le Maistre
3/22/2012
50%
50%

NEC Corp. (Tokyo: 6701) subsidiary NetCracker Technology Corp. , already one of the biggest Service Provider Information Technology (SPIT) vendors in the world, is set to get even bigger with the planned acquisition of Convergys Corp. (NYSE: CVG)'s Information Management telecom software business unit for US$449 million.

The Information Management unit, which has about 2,500 staff and about 150 customers, is a well established supplier of billing, customer care and revenue management systems to utility and logistics companies as well as to mobile, fixed-line and cable operators. (See Convergys Launches CRM 2.0, Convergys Touts Progress With Telekom Deutschland, SmarTone Upgrades Convergys BSS, Cox Reups With Convergys and Orange Austria Picks Convergys.)

In 2011, Convergys's Information Management unit generated revenues of $328.8 million, down 3 percent year-on-year, and operating income of $37.2 million, up 12 percent compared with 2010.

When it announced its full-year 2011 results on Feb. 7, Convergys estimated full-year 2012 revenues for the Information Management unit of $330 million to $340 million, a slight year-on-year increase.

The acquisition is expected to close during the second quarter of 2012.

The Information Management will become part of NetCracker, which currently boasts a broad range of OSS capabilities and significant (but unspecified) annual sales of hundreds of millions of dollars, the bulk of which comes the NEC network management systems the Japanese vendor folded into NetCracker following its acquisition in June 2008. (See NetCracker Flexes Its SPIT Muscle, SPIT Watch: CA, NEC Bulk Up and NEC Shells Out $300M for NetCracker.)

NetCracker added to its OSS assets in 2011 with the acquisition of Subex Ltd. 's IP service fulfillment business line, though that was a relatively small transaction. (See Subex Offloads Its Problem Child.)

NEC's rationale for buying the Convergys unit is that, once the deal is closed, it will be able to offer communications service providers (CSPs) and enterprises a full range of OSS and BSS tools that can be deployed by the customer, offered as a managed service or provisioned as a cloud service.

Why this matters
The deal makes NetCracker not only one of the biggest SPIT vendors globally but one of the few that would be able to offer such a broad range of operation and business support tools, making it a stronger rival to the likes of Amdocs Ltd. (NYSE: DOX) and Oracle Corp. (Nasdaq: ORCL).

The deal will also strengthen NetCracker's proposition in other vertical sectors that it has already been targeting, such as utilities. (See NetCracker Looks Outside Telecom and NetCracker Wins Utility Deal.)

In terms of the broader market, the move extends the gap between the major telecom software vendors, such as Amdocs, Comverse Inc. (Nasdaq: CNSI), Ericsson AB (Nasdaq: ERIC) (following its acquisition of Telcordia), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM) and Oracle, that can offer a broad range of products and support R&D operations from their cashflow, and the hundreds of smaller SPIT players that have targeted products.

With the emphasis more and more on providing CSPs with broader packages of integrated capabilities, the likes of NetCracker are likely to get stronger, while the smaller, vendors are likely to find it even tougher to generate new business.

For more

— Ray Le Maistre, International Managing Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
Que Sera Sarah
Growth of the 5G Ecosystem

3|6|15   |   1:15   |   (1) comment


Use cases and industry collaborations dominated 5G discussions during Mobile World Congress 2015. For what the road to 5G means for operators and their partners, head to the Building America's 5G Ecosystem event in New York on April 14.
LRTV Custom TV
Sonus NaaS IQ Real-Time Demo

3|6|15   |   4:03   |   (0) comments


Compass Networks Chairman and CEO Matt Bross and Ray Dolin, CEO of Sonus Networks, demonstrate their Sonus IQ SDN solution using a live video conference connection.
LRTV Custom TV
LRTV Talks Carrier WiFi & WiFi Calling With Aptilo Networks

3|6|15   |   4:53   |   (0) comments


We stopped by Aptilo Networks, a market leader in WiFi service management and offloading, to discuss the new possibilities with next-generation WiFi calling and why WiFi should be a natural part of any operator strategy.
LRTV Interviews
NGMN Chairman Outlines His 5G Vision

3|6|15   |   5:10   |   (1) comment


Bruno Jacobfeuerborn, chairman of the NGMN Alliance and Deutsche Telekom CTO, shares his thoughts on the challenges, opportunities and costs of 5G.
LRTV Interviews
In the Cloud With Telecom Italia

3|5|15   |   7:10   |   (0) comments


Light Reading CEO Steve Saunders sits down with Telecom Italia's Simone Battiferri at Mobile World Congress to discuss virtualization, agility and the economic advantages of the cloud.
LRTV Huawei Video Resource Center
New Ways of Working

3|5|15   |   4:24   |   (0) comments


At the ICT Leaders Roundtable, hosted jointly by Light Reading and Huawei at the Hotel Renaissance in Barcelona just prior to Mobile World Congress, Hong Kong Telecom's Michael Yue explains how the transformation in its business has changed its customer relationships.
LRTV Huawei Video Resource Center
Bridging the Digital Gap

3|5|15   |   4:03   |   (0) comments


At the ICT Leaders Roundtable, hosted jointly by Light Reading and Huawei at the Hotel Renaissance in Barcelona just prior to Mobile World Congress, Boingo's Dr. Derek Peterson explains how ICT can help telcos bring the physical and virtual worlds closer together.
LRTV Huawei Video Resource Center
Making the Internet of Things Affordable

3|5|15   |   2:42   |   (0) comments


At the ICT Leaders Roundtable, hosted jointly by Light Reading and Huawei at the Hotel Renaissance in Barcelona just prior to Mobile World Congress, Telefonica's Dr. Mike Short explains how the Internet of Things demands a new low-cost approach to connectivity from telcos.
LRTV Huawei Video Resource Center
Evolution, Not Revolution

3|5|15   |   2:00   |   (0) comments


At the ICT Leaders Roundtable, hosted jointly by Light Reading and Huawei at the Hotel Renaissance in Barcelona just prior to Mobile World Congress, Heavy Reading's Patrick Donegan explains why telcos can't be too hasty in their efforts to transform themselves.
LRTV Custom TV
Management & Orchestration Enablement Strategies Required for NFV Commercial Success

3|5|15   |   6:22   |   (0) comments


NFV commercial success rests on successful service orchestration strategies which can span heterogeneous physical, virtual, legacy and next-gen networks. Network data and security integrity are additional key aspects. Nakina provides a suite of orchestratable network integrity applications built on an open, scalable MANO enablement platform.
LRTV Huawei Video Resource Center
The Power of Five Convergences in OceanStor OS

3|4|15   |   6:24   |   (0) comments


OceanStor OS is Huawei's brand-new storage operating system. While inheriting the consistent high stability, reliability and performance from the company's previous storage products, OceanStor OS abounds in new converged storage features. Specifically, the new storage operating system achieves "five convergences" to lift storage convergence to a higher level.
LRTV Huawei Video Resource Center
4K Brings Extreme Video Experience

3|4|15   |   8:10   |   (0) comments


4K video is a hot topic in the video industry. It will certainly bring an extreme video experience to end users. At the same time, however, it will also pose a big challenge to operators. Check out this Huawei 4K experts' discussion about how operators can achieve success in 4K video service.
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
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
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
Internet Pioneers Decry Title II Rules
Carol Wilson, Editor-at-large, 3/2/2015
Wheeler: We'll Enforce Title II 'Case-By-Case'
Sarah Thomas, Editorial Operations Director, 3/3/2015
New CenturyLink CTO in Major Overhaul
Carol Wilson, Editor-at-large, 3/4/2015
Alibaba 'Planting a Flag' in US Cloud Market
Mitch Wagner, West Coast Bureau Chief, Light Reading, 3/4/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Chattanooga’s EPB publicly owned utility comms company has become a poster child for how to enable a local economy using next-gen networking technology. Steve Saunders, Founder of Light Reading, sits down with Harold DePriest, president and CEO of EPB, to learn how EPB is bringing big time tech to small town America.
Light Reading CEO Steve Saunders talks transformation and virtualization – including Light Reading's independent testing of the vendor's virtualization solutions – with Cisco CEO John Chambers at Mobile World Congress in Barcelona.
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.