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SPIT Vendors Indulge in M&A Action

Redknee's buying, Intec's looking for a buyer, and TTI's being bought

July 30, 2010

4 Min Read
SPIT Vendors Indulge in M&A Action

There's no shortage of M&A action in the Service Provider Information Technology (SPIT) sector currently, with companies adding to their assets, hanging out the "For Sale" sign, and welcoming new owners. (See The SPIT Manifesto.)

Redknee nabs Nimbus
Canadian vendor Redknee Inc. (Toronto TSX: RKN), which supplies converged billing, charging, rating, and policy management tools mainly to competitive mobile operators, is finally putting its M&A strategy into action with the planned €11.25 million (US$14.7 million) purchase of Spanish customer relationship management (CRM) specialist Nimbus Systems SL . (See Redknee to Buy Nimbus, Redknee Gets in the Loop, Telfort Deploys Redknee, Bakrie Expands With Redknee, and Redknee Reports Q4, Full Year.)

Redknee is keen on making acquisitions to help its growth strategy and has been looking for some time for specialist companies to buy. (See Redknee Builds M&A Warchest and Redknee Preps Shopping Spree.)

The move gives Redknee not only Nimbus's software, but customer accounts with the likes of Orange (NYSE: FTE) (Orange), Telefónica SA (NYSE: TEF), Telia Company , and Vodafone Group plc (NYSE: VOD). Redknee is confident Nimbus will also help it win new business in Latin America.

The deal, which is set to close before the end of September, will see Redknee pay €7 million ($9.1 million) in cash and the balance in shares.

The vendor's share price is up by C$0.03 to C$1.74 on the Toronto exchange Friday.

Intec in talks
Billing specialist Intec Telecom Systems plc (London: ITL), meanwhile, is looking for a buyer, and has found at least one interested party.

In a filing with the London Stock Exchange earlier this week, the company notes it's engaged in "highly preliminary discussions with a third party which may or may not lead to an offer for the Company."

Not surprisingly, the news gave Intec's stock a lift. Intec's share price ended last week at 55.25 pence, but has risen steadily in the past five days to close today at 76.75 pence, up 38.9 percent this week.

Intec, which has hundreds of deployments of its interconnect billing platform and Singl.eView retail billing system at carriers around the world, has a market value of £228.6 million ($359 million). (See Intec Wins Entel Deal, Intec Boasts Performance Levels, Grameenphone Deploys Intec, and Intec Wins Wind Deal.)

But the company has been feeling the pinch of the global economic downturn. In the six months to the end of March this year its revenues were down 13 percent year-on-year to £70 million ($110 million), and in April it issued a profits warning. (See Intec Issues Profit Warning.)

Intec's could appeal to a number of large companies looking to bolster their SPIT capabilities, especially given the maturity of the Singl.eView platform. Major telecom software players such as Amdocs Ltd. (NYSE: DOX), Convergys Corp. (NYSE: CVG), and Oracle Corp. (Nasdaq: ORCL) are among those that could be interested in Intec's assets.

Nokia Networks could benefit from Intec's post-paid billing capabilities to add to its pre-paid systems, though NSN has just drawn deep from its M&A well with a move on Motorola Inc. (NYSE: MOT)'s wireless infrastructure business. (See NSN & Moto: It's All in the Execution .)

TTI to tie the knot
OSS specialist TTI Team Telecom International Ltd. (Nasdaq: TTIL) has been given the go-ahead by its shareholders to fall into the arms of its suitor, Teoco Corp. , which sells revenue, cost, and routing management software to network operators. (See TTI Shareholders Approve Merger, Teoco to Buy TTI Telecom, and Mgmt World: TTI Next to Get Bought?)

Teoco has agreed to pay $58 million for a company that generates around $40 million a year in revenues and is currently making a small profit each quarter.

Heavy Reading analyst and telecom software market specialist Ari Banerjee believes "this is a missed opportunity for leading OSS/BSS heavyweights such as Amdocs and Oracle. Both these companies lack an in-house service assurance solution and currently depend on key partnerships with IBM Corp. (NYSE: IBM) and HP Inc. (NYSE: HPQ) to provide assurance capability to customers."

The analyst adds: "Service assurance is a key component of OSS solutions, and it would have made a lot of sense for one of these heavyweights to pick up TTI and reduce their reliance on partners. TTI has invested a lot in [next-generation mobile] assurance, and with operators focusing on rolling out 4G networks, this acquisition could have been very complementary for these major players."

— Ray Le Maistre, International Managing Editor, Light Reading

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