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Comptel Enhances Its OSS

Scandinavian software player snaps up mediation and network inventory businesses for $22M to broaden portfolio

September 19, 2005

3 Min Read
Comptel Enhances Its OSS

Finnish OSS firm Comptel Corp. (Helsinki: CLT1V) has broadened its telecom software portfolio, and added some major European carrier accounts, with the acquisition of two OSS businesses from EDB Telesciences AS for a total of 140 million Norwegian Kroner (US$21.8 million) in cash.

Comptel believes that growth in the OSS market will come as carriers move from in-house systems to commercial, product-based OSS platforms, while they upgrade their networks and converge networks and services. It figures about 70 percent of operators are still using systems developed by their own network management teams or systems integrators see Comptel Sees Soft OSS Market).

The move makes sense from a strategic point of view. Carriers want to buy multiple OSS systems, especially those that are closely linked, such as provisioning and inventory, from a single source. This acquisition gives Comptel a bigger product portfolio it can sell to a list of big carrier customers.

Already a significant player in the network provisioning, activation, and mediation markets, Comptel now enters what is arguably the hottest OSS market, inventory management, by buying EDB Telecom's network inventory business, better known as Incatel Ltd. It is also taking on EDB's European mediation business, while the North American mediation business is being sold by EDB to the unit's management.

Incatel isn't a household name among carriers -- fewer than 15 percent of carrier executives recognized the brand in Heavy Reading's "2005 OSS Market Perception Study," and it's still relatively small. It generated revenues of NOK121 million ($18.9 million) in 2004 from a handful of customers (see Report: OSS Minnows Have Muscle). Those customers include European incumbents such as Belgacom (Euronext: BELG), Cesky Telecom a.s. (now part of Telefónica SA), TDC A/S (Copenhagen: TDC), Telenor ASA (Nasdaq: TELN), and TeliaSonera AB (Nasdaq: TLSN).

OSS Observer says the market for inventory management systems is set to grow at more than 15 percent a year. According to Stratecast Partners, it's already worth more than $310 million a year.

Olivier Suard, Incatel's marketing director, notes that "most RFPs are looking for a complete workflow solution, and not just inventory management. It makes sense to be part of a broader offering."

Comptel faces stiff competition in the inventory market, though, especially from the sector's top four players: Cramer Systems Ltd., Telcordia Technologies Inc., {dirlink 2|52} (Nasdaq: MSLV), and NetCracker Technology Corp. (see Cramer Dubs Dubois CEO). Telcordia bolstered its position in the inventory market by buying Cramer's main rival, Granite Systems, in May last year (see Telcordia Shells Out at Last).

Further M&A activity in the inventory market has been the source of much scuttlebutt this year, with billing giant Amdocs Ltd. (NYSE: DOX) linked with a move for Cramer (see OSS Business Is Buoyant).

Less interesting is EDB's European mediation business, which adds far less to Comptel's armory. It generated just NOK34 million ($5.3 million) in revenues in 2004.

Comptel, which says it will retain all 162 staff, believes the acquisition will close on October 3. Its share price climbed by nearly 2 percent to €1.78 on the news.

— Ray Le Maistre, International News Editor, Light Reading

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