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Managed Services

Ericsson Snaps Up Systems Integrator

Ericsson added 1,000 systems integration experts to its Professional Services division's payroll today with the acquisition of Italian consultancy and integrator Pride SpA.

The Swedish giant, which boasts a leading position in the global telecom professional services market, now has 40,000 services staff worldwide. Financial terms of the deal were not disclosed, and Ericsson declined to comment on Pride's revenues or profitability, though the Swedish giant told Light Reading that the acquisition will have an "immaterial but positive" impact on its earnings.

Pride's Website shows that the company generated revenues of €120 million (US$174 million) in 2008 and had increased its revenues each year since 2004.

Pride provides a range of consultancy, integration, and managed services, and markets its own suite of OSS tools for multiple service and network assurance tasks, such as provisioning, fault management, inventory management, and so on. It has also developed its own mobile applications for enterprises, such as a sales force automation tool and corporate portal development.

According to Ericsson, Pride has worked for all of Italy's main fixed and mobile carriers, including Telecom Italia (TIM) , Wind Telecomunicazioni SpA , 3 Italia , Vodafone Italy , Fastweb SpA (Milan: FWB), and Tiscali SpA , as well as regional network operators, utility firms, and public administrations. Pride also counts a number of vendors as customers and partners, including Alcatel-Lucent (NYSE: ALU), Cisco Systems Inc. (Nasdaq: CSCO), Italtel SpA , and Nokia Networks , as well as Ericsson.

Ericsson, which already has an unspecified number of professional services staff based in Italy, has a long track record there and is well established with the main carriers. (See Ericsson, T Italia Trial Solar, Ericsson Expands WIND Network, Ericsson Wins Ringback Deal, Ericsson Scores $2B Services Deal, and Telecom Italia Picks Ericsson for IMS.)

The move will help Ericsson solidify its position as the leading telecom professional services player. Ericsson generated about $2.7 billion in services revenues during the third quarter of 2009 (combined revenues from the Professional Services division and the network rollout services from the Networks division), while Nokia Siemens reported services revenues of about $1.9 billion, and Alcatel-Lucent managed about $1.26 billion. (See Pressure Tells on Ericsson's Q3, No Sign of Recovery for Nokia Siemens, and AlcaLu Reports Q3.)

According to a recent report from Technology Business Research Inc. (TBR) , IBM Global Services and HP Inc. (NYSE: HPQ) are the next biggest players in what TBR calls the Telecom Infrastructure Services market, while Cisco Systems Inc. (Nasdaq: CSCO), ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), and Huawei Technologies Co. Ltd. recorded the highest year-on-year growth in service revenues during the third quarter of 2009.

TBR expects the likes of Ericsson, Alcatel-Lucent, and Nokia Siemens to push further into the professional services market as profitable infrastructure sales opportunities become harder to find. The research firm "expects systems integrators such as IBM, HP and Accenture , which have typically taken a stronger position in consulting engagements with network operators, to face increasing competition from traditional equipment vendors in [the fourth quarter of 2009] and 2010."

This isn't the first time Ericsson has expanded its Professional Services capabilities through an acquisition. It has previously acquired five specialist consulting and systems integration firms, including Turkish firm Bizitek in May 2009. (See Ericsson Buys Turkish Integrator, Ericsson Invests in IPTV Smarts, Ericsson Buys Systems Integrator, Ericsson Acquires Teleca OSS, and Ericsson Acquires Audilog.)

— Ray Le Maistre, International Managing Editor, Light Reading

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