Redknee Preps Shopping Spree
Skoczkowski says the market for enhanced billing capabilities -- whether in an integrated platform or delivered using a combination of multiple platforms –- is "fragmented. We want to get more market share through acquisitions" to build on Redknee's current converged billing system market share of around 4 percent.
Among the potential acquisition targets Skoczkowski has in mind are his peers in the specialist world of enhanced billing and customer care systems -- companies like CBoss Corp. , FTS (London: FTS), Mind CTI Ltd. (Nasdaq: MNDO), and Orga Systems . Another much larger player he cites as a rival vendor in this market is Comverse Inc. (Nasdaq: CNSI) (See TIM Uses Orga, FTS, HP Partner, FTS Serves Up a Policy Platform , Convergence Drives M&A, MIND CTI Buys Sentori, and Comverse Bills LuXcom.)
Without consolidation, believes the CEO, it will become even harder to compete with the large equipment vendors, particularly Ericsson AB (Nasdaq: ERIC), that dominate the market. Alcatel-Lucent (NYSE: ALU) and Nokia Networks are also significant players in the sector as they look to build on their installed bases of pre-paid charging system deployments.
But Skoczkowski is confident that a solid business can be built, especially in the rapidly growing emerging markets, where Ericsson, following its acquisition of post-paid billing firm LHS, has a particularly strong proposition. (See Ericsson Buys Billing Vendor LHS.)
"Ericsson is the big one, but we have won our last six deals against them. They have the size, though I would say [Ericsson's billing platform] is not yet fully converged," he notes somewhat cheekily.
One acquisition down, more to come
This isn't the first time Redknee's CEO has talked about growth through acquisitions, but Skoczkowski seems to be prepared to walk the walk as well as talk the talk: Having stated his intention in October 2007 to make an acquisition in 2008, he went right ahead and did just that, adding Australian outfit Argent Networks Ltd. , an existing partner, to the Redknee portfolio for US$795,000 (including debt). (See Redknee Buys Argent's In-Bill.)
The deal, which closed in February this year, added Argent's interconnect billing assets to Redknee's converged billing capabilities, brought some new customers on board, such as Philippine Long Distance Telephone Co. (PLDT) , PT Indosat Tbk , and Celcom Malaysia , and took Redknee's headcount to nearly 400.
"The plan now is to make bigger acquisitions," says Skoczkowski, who now needs to find some willing participants in the consolidation process. "I have spoken to all the competitors. There is a consensus among the smaller players that there needs to be consolidation."
Not everyone recalls engaging in such conversations, though. "FTS did not receive an approach from Redknee related to a merger," states Alon Raz, CFO of FTS, in an email response to Light Reading's questions.
And FTS has ideas of its own. "Following our track record of successful M&As in the past, we are now turning our focus to growth and examining potential mergers and acquisitions, based on our long term strategy of non-organic growth parallel to organic growth," noted the firm's CEO Amos Sivan as part of the company's 2007 financial report. (See FTS Buys Customers, Staff.)
— Ray Le Maistre, International News Editor, Light Reading
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