& cplSiteName &

Comptel Looks Like the Start of Nokia Software Spending Spree

Ray Le Maistre
2/9/2017
100%
0%

Nokia is excited. It previously announced plans to build a significant standalone software business by pumping up its Applications & Analytics unit, and has backed up its words with actions in the form of a €347 million cash bid to acquire fellow Finnish firm Comptel, a communications sector software specialist. (See Nokia to Create Standalone Software Biz, Target New Verticals.)

You can check out the details of the bid and some excellent analysis of the relative financials by my colleague Iain Morris in Nokia Eyes Bigger Software Role With €347M Comptel Bid.

Some industry analysts have weighed in too. (See Nokia's Buying Comptel: What the Analysts Say.)

But does the deal make sense?

On the face of it, yes. The two companies know each other and have worked together to deploy their relative technologies at a number of operators. Comptel is a steady company with a reliable revenue stream, its financials have improved recently, and in the area of service orchestration in the telco cloud environment, and in real-time analytics in the mobile BSS market, has some capabilities that will give Nokia some good stories to pitch to customers. There doesn't appear to be much product overlap but Comptel doesn't appear to be bringing much in the way of new customer accounts either.

But acquisitions are hard to pull off: The telecoms industry M&A road is lined with crash victims.

And growing a comms industry software business via acquisitions is something that Ericsson has been throwing money at for a number of years now: That has resulted in greater market share but that part of Ericsson's business has not blossomed as it had hoped and doesn't appear to have given it any advantages in the critical MANO (Management and Orchestration) sector, where Amdocs has staked a particular claim to fame by being AT&T's buddy in its ECOMP (Enhanced Control, Orchestration, Management and Policy) project.

Nokia isn't saying that it will build this software business through M&A activity alone but if it is going to scale up any time soon then more acquisitions will be inevitable -- that will add revenues and skills and products but also add cost, complexity and (as so often happens with acquisitions) cause a modicum of confusion and create opportunities for aggressive rivals. The Nokia team says it will engage in further opportunistic M&A when and where it makes sense and this isn't the first time it has much such a move, of course -- about a year ago it acquired Nakina, so it has been through something that is vaguely similar (though smaller and not publicly listed) in recent times. (See Nokia Snaps Up Nakina.)

And you can bet your albondigas (I'm getting in the mood for MWC...) that Amdocs, Ericsson, Oracle, IBM, NetCracker and others will be in a frenzy today, looking at what this means, what might happen next and how they need to respond.

In the meantime, I expect Nokia already has its next target lined up. Before it makes its next move, however, it needs to close the Comptel deal -- that's now in motion, with today's announcement, but it isn't a done deal. Without any hold-ups, it's due to close during the second quarter. But a rival bid could come in and there appears to be at least a hope amongst investors that this might happen as Comptel's share price closed today on the Helsinki exchange at €3.07, slightly above Nokia's bid price. Key Comptel investors have already agreed to accept the Nokia cash bid, but if a higher rival bid comes in, the Comptel board is obliged to consider it.

So at least for a few weeks it will be what's known in UK soccer circles as squeaky bum time for the teams at Nokia's Applications & Analytics unit and the folks at Comptel, most of whom have been told very publicly that their jobs are safe.

And if the deal closes there will be some very close attention paid to exactly how it plays out -- and what happens next.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading


CALLING ALL CLOUD, NFV AND SDN COMPANIES:
Make sure your company and services are listed free of charge at Virtuapedia, the comprehensive set of searchable databases covering the companies, products, industry organizations and people that are directly involved in defining and shaping the virtualization industry.


(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Ray@LR
100%
0%
Ray@LR,
User Rank: Blogger
2/9/2017 | 1:55:07 PM
Where next for Nokia?
What should Nokia be lokoing to bid for next? Any ideas out there?
More Blogs from Shades of Ray
The shortlist for the Company of the Year (Public) category features eight impressive contenders.
The shortlist for the Outstanding Components Vendor category features five strong contenders.
Local branch of Australian service provider causes s**tstorm with advert stating preference for white staff.
Great coffee is essential when at Mobile World Congress and, once again, Spirent has delivered.
The European region, including Russia, has experienced two years of 20%+ growth in FTTH/B connections but many markets still haven't really woken up.
Featured Video
From The Founder
John Chambers is still as passionate about business and innovation as he ever was at Cisco, finds Steve Saunders.
Flash Poll
Upcoming Live Events
June 26, 2018, Nice, France
September 12, 2018, Los Angeles, CA
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 17, 2018, Chicago, Illinois
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
NFV Is Down but Not Out
Iain Morris, News Editor, 5/22/2018
Trump Denies ZTE Deal, Faces Senate Backlash
Dan Jones, Mobile Editor, 5/22/2018
What VeloCloud Cost VMware
Phil Harvey, US News Editor, 5/21/2018
5G in the USA: A Post-BCE Update
Dan Jones, Mobile Editor, 5/23/2018
Vanquished in Video, Verizon Admits OTT Defeat
Mari Silbey, Senior Editor, Cable/Video, 5/23/2018
Animals with Phones
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed