BSS (inc. billing, revenue assurance)

Redknee Preps Shopping Spree

Canadian telecom software specialist Redknee Inc. (Toronto TSX: RKN) is planning an IPO on the Toronto Stock Exchange to raise money for an acquisition spree that the company's CEO, Lucas Skoczkowski, believes is essential in the face of fierce competitive pressure from the major equipment vendors.

Redknee is already listed on the London Stock Exchange , where it debuted in February 2007, raising C$39.9 million (US$39 million).

Now Skoczkowski says he's targeting a Toronto listing "by the end of the year" to raise an unspecified amount of money for acquisitions.

At a recent meeting in London, Skoczkowski told Light Reading he expects to make "three to five transactions in the next three years, and they need to be meaningful acquisitions."

By that he means they must increase Redknee's "customer footprint" (currently around 60 mobile operators), add to the employee skills set and the company's geographic reach, and enhance a product base that is underpinned by a growing number of strategically important patent awards, the latest of which was announced last week. (See Redknee Awarded New Patent, Redknee Awarded Patent, and Redknee Gets Patent.)

Redknee in a nutshell
Redknee has developed an integrated software platform -- incoporating converged billing systems (pre- and post-paid), subscriber policy and identity management capabilities, and application-specific modules that enable services such as mobile transactions -- that is aimed primarily at emerging market wireless operators. (See Redknee Intros Top-Up, Redknee Adds Mobile Money, Redknee Upgrades Services, Customer Focus Through Identity Management, Redknee Offers Software, and Redknee Secures Mobile.)

That all-in-one system has proved popular among mobile operators in emerging markets, where service providers need revenue-generating systems they can deploy quickly. Skoczkowski says Redknee's software can be configured and be in commercial service in just eight weeks. (See Redknee Wins in Cambodia, Redknee Wins in Africa, Far EasTone Deploys IMS, Redknee Boasts Customers, and Redknee Wins in Kuwait.)

But Redknee's customer base isn't limited to the emerging markets: Its messaging management and billing capabilities have also been deployed in mature markets including the U.K., Germany, and the U.S., by big names such as AT&T Inc. (NYSE: T) (Cingular), E-Plus Mobilfunk GmbH , Telefónica UK Ltd. , Orange (NYSE: FTE)'s Orange Group, T-Mobile International AG , and Vodafone Group plc (NYSE: VOD). (See Redknee Delivers, Vodafone Picks Redknee, O2 Uses Redknee, and E-Plus Roams With Redknee.)

And it's showing signs of significant growth. In the six months ended March 31, 2008, Redknee's revenues were up by 16 percent to C$24.1 million (US$23.6 million), its orders were up 37 percent to C$33 million (US$32.3 million), and its backlog was up 49 percent to C$28.4 million (US$27.8 million) compared with a year earlier.

The company is on course to generate revenues of between C$45 million and C$48 million (US$44 million to US$47 million) from its 60 operator customers in its current financial year, which finishes at the end of September 2008.

Redknee is yet to achieve profitability, though. It reported a net loss of C$1.46 million (US$1.43 million) in the half year to March, but, again, that was an improvement (of 54 percent) compared with a year earlier. The software vendor believes it's on course to be profitable from 2009 onwards.

Redknee's share price stands at 40.5 pence (US$0.80), about half the price it commanded in early July 2007.

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