Mobile Billing Supplier Tanks

"Shaping the Future of Billing" is still the message that greets visitors to TelesensKCSL AG's Website. If there's any truth in that then the sector's future is in big trouble, as the company is now insolvent and has gone into receivership.

While staff at the once successful firm ponder their future -- including the prospect of a management buyout for the 350 employees at the Edinburgh-based part of the business -- rivals eye its telco client list of about 30 firms, in particular the wireless customers that need integrated voice and data billing systems. One industry insider says "there must be plenty of companies poking over the bits." Those bits, in terms of wireless customers, include the U.K. business of mmO2 Ltd. (NYSE: OOM), Orange France, three of Vodafone Group PLC's (NYSE: VOD) European operations (Ireland, Greece, and Romania), and Finnish mobile operator Radiolinja Oy.

Among those believed to be circling the TelesensKSCL cadaver and looking to talk to the receivers are Convergys Corp. (NYSE: CVG) (which appears to already have many of the same customers), ADC Telecommunications Inc. (Nasdaq: ADCT) , Amdocs Ltd. (NYSE: DOX), and CSG Systems International Inc. (Nasdaq: CSGS). None have confirmed any interest: "No comment" is the order of the day.

CSG went one further, showing how much the billing sector is on the back foot at the moment: "We do not comment on other companies' successes or failures or whether or not a specific company would be interesting to CSG from an acquisition standpoint. We would, however, like to confirm that we have a strong business model and an experienced management team that provides investors with comfort during these difficult times," stated Liz Bauer, CSG's senior vice president, investor relations and corporate communications. [Ed. note: So, is CSG sending its investors cushions? chocolates? antidepressants? Did we ask?]

A strategic position in the mobile sector could be the impetus for any move to pick up business or assets from the official receivers, believes Mark Basham, director, OSS, at consultancy RHK Inc. "It would be an extremely tactical purchase if any of the big companies went for it. Most of the installed base of customers goes back a few years, and [TelesensKSCL] wasn't involved when mmO2 chose its billing suppliers for the 3G setup in the Isle of Man," says Basham.

It is more likely, reckons Basham, that a smaller rival such as Portal Software Inc. (Nasdaq: PRSF) or Xacct Technologies Inc., or even a company looking to get into billing such as Agilent Technologies Inc. (NYSE: A), might step in with an offer.

TelesensKSCL's woes began in late 2000 when German firm Telesens, which had one major customer -- Deutsche Telekom AG (NYSE: DT) -- that was also an investor (DT owns 25.9 percent through its T-Ventures venture capital business), acquired Scottish billing systems business KSCL for about €225 million (US$223 million). KSCL was in profit at that point. As the industry crashed, so the new joint company leaked money until the German parent, TelesensKSCL AG, filed for insolvency last week. There were hopes the Scottish part of the business -- TelesensKSCL (Holdings) Ltd. and its subsidiary TelesensKSCL Ltd. -- might survive if a buyer came forward quickly, but it too went under on June 25.

"A lot of the problems stemmed from the takeover," a source close to the company told Unstrung under condition of anonymity. "They invested so much in the takeover and bought when the shares were really high. Some of the larger billing companies are looking at the business -- it's a good customer base."

Deutsche Telekom is officially unconcerned at the developments. "We have been careful and have no further risks associated with these developments," DT spokesman Hans Ehnert told Unstrung.

O2 UK was quite guarded about what effect the company's demise would have on its systems. "We have contingency plans to deal with such situations. We have the in-house capabilities to provide the support needed to maintain the systems," says a spokeswoman.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com