Service provider IT (SPIT) vendor wants to be a bigger hitter in OSS and policy control, but how can it break out of its current rut?

August 8, 2011

4 Min Read
Comptel Looks to Shift Up a Gear

Juhani Hintikka is on a mission to transform steady, reliable mid-tier OSS vendor Comptel Corp. (Nasdaq, Helsinki: CTL1V) into a telecom software and services player that can pack a stronger punch in the Service Provider Information Technology (SPIT) sector.

But is that a mission impossible for the former head of NSN's OSS business, who took over as Comptel's CEO in January? (See Comptel Appoints CEO.)

The nature of the CEO's task was laid plain on July 20 with Comptel's second quarter financials. The company reported revenues of €20 million (U.S. $28.4 million), down slightly from a year ago, and an operating profit of €1.2 million ($1.7 million) compared with €3.8 million ($5.4 million) a year ago. Weakness in Europe is impacting its numbers, but growth in the Middle East and Africa is, in part, making up for that.

The thing with Comptel, which sells activation, provisioning, mediation, charging and policy control tools to service providers (280 customers in 85 countries during its 25-year life), is that it's never wildly up or down -- it's a steady ship, as shown by the table below. (See DNA Deploys Comptel's PCRF, Comptel Launches Control & Charge and Comptel Snaps Up Axiom.)

Table 1: Comptel Key Financial Indicators 2006-2010

In � millions (except EPS and share price data)

2006

2007

2008

2009

2010

Net sales

80.4

82.4

84.8

74.9

77.9

Operating profit

11.2

16.5

11.4

1.0

8.9

Earnings pre share (EPS)

�0.05

�0.10

�0.06

-�0.02

�0.04

Highest share price

NP

NP

1.58

0.96

0.95

Lowest share price

NP

NP

0.60

0.57

0.68

Market value at year end

NP

NP

73.8

83.3

73.5

NP = not provided
Source: Comptel





The issue for its investors, though, is that it's not making any waves. Following the second quarter results the company's share price on the Stockholm exchange dipped by 3.4 percent to €0.57 giving the company a market value of about €61 million ($86.6 million), and it hasn't shifted much since (though it dipped recently, like most stocks, as the world's markets took a collective tumble).

So what can Hintikka do to shake things up?

Build stronger partnerships and develop new products, it seems.

"I was hired to build the company," he tells Light Reading in a recent interview. "We will increasingly sell through partners. A lot of the investment is driven by network projects, so we need to build up relationships with companies that are striking network deals."

Comptel already has partnerships with Alcatel-Lucent (NYSE: ALU), IBM Corp. (NYSE: IBM) (particularly in India, the company's single biggest market), Huawei Technologies Co. Ltd. , Nokia Networks and Cisco Systems Inc. (Nasdaq: CSCO), with which it is working on cloud services offerings.

In terms of the carrier cloud, Comptel is eager to provide capabilities that can help carriers charge for and manage their cloud services. "We have seen the opportunities to help operators make best use of their network assets," says the CEO.

But Comptel clearly needs to do more in developing those channels. During the first half of 2011, partner sales shrunk to €8.3 million ($11.8 million) from €12.9 million ($18.3 million) a year earlier.

The CEO also says the company has been investing in its sales channel strategy and in new product development, including an "integrated platform that customers can build on." Comptel has also developed a Policy and Charging Rules Function (PCRF)-compliant Policy Control tool with charging capabilities that, says Hintikka, has been deployed group-wide by TeliaSonera. (See Comptel Launches Control & Charge.)

Hintikka is certainly putting his company's money where his mouth is, as Comptel's R&D expenditure grew more than 22 percent year-on-year in the first half of 2011 to €7.7 million ($10.9 million), equivalent to 21 percent of net sales.

Those types of investments don't pay off immediately, though, so Hintikka needs to look to his existing portfolio for near-term gains. Asia/Pacific and the Middle East look like the most promising regions: Comptel recently landed a significant deal through partner AlcaLu to be the key service fulfillment systems supplier for Australia's national broadband network.

In that instance, the service-catalogue approach -- brought on board with the acquisition of Axiom in 2008 -- helped land the deal because it is very suited to wholesale networks that are hosting multiple retail service providers, notes Comptel's marketing director Olivier Suard. (See Comptel Lands NBN OSS Deal and Comptel Snaps Up Axiom.)

So could further M&A activity help Comptel grow? Hintikka doesn't rule it out. "It can be part of the strategy, if there's something that's needed, then that's possible," he notes.

— Ray Le Maistre, International Managing Editor, Light Reading

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