Comptel Snaps Up Axiom

It's been a busy start to the week for OSS M&A watchers: Just as Atreus Systems Inc. was settling into its new home, British firm Axiom Systems Inc. was celebrating its acquisition by Finnish OSS player Comptel Corp. (Nasdaq, Helsinki: CTL1V). (See Comptel Acquires Axiom and Sonus Buys OSS Firm.)

Comptel has snapped up Axiom for £7 million in cash (US$13.8 million), though additional performance-based payments could take the price as high as £23 million ($45.5 million).

The move gives Comptel, which is strong in the mobile fulfillment (inventory, order management, provisioning, activation) software market, a ready-made position in the fixed, IP-based fulfillment market, where Axiom has built a 35-strong customer base that includes BT Group plc (NYSE: BT; London: BTA), Telekom Austria AG (NYSE: TKA; Vienna: TKA), Deutsche Telekom AG (NYSE: DT), Telia Company , and Telecom New Zealand Ltd. (NYSE: NZT; New Zealand: TEL).

The deal also strengthens Comptel's position in Europe and Asia/Pacific, where the majority of both firms' customers are based. (See Axiom Wins at T-Com, Axiom Wins in Nordics, Axiom Wins at SingTel, Axiom, Wipro Land Deal, Telekom Austria Uses Axiom, and C&W Uses Axiom's OSS.)

And it gives the Finnish firm a strong position in one of the OSS world's most important emerging spaces: service catalogues.

These catalogues are designed to help carriers use software building blocks to create, provision, and bill for new applications much more quickly than before. It's an area where Axiom has been working closely with BT, work that resulted in an impressive and award-winning OSS project that was showcased last year and which led to the publication of new TM Forum specifications earlier this year. (See TM Forum Has New Specs, Why OSS Silos Must Come Down, PSA Wins OSS Catalyst Award, Axiom Intros Active Catalog, and OSS Sizzles on French Riviera.)

Axiom, which has 87 staff and had raised about $30 million in funding since its formation, generated an unspecified operating loss from revenues of £7.8 million ($15.4 million) in 2007 and is expected to increase its sales by about 15 percent in 2008 to around £9 million ($17.75 million).

The additional acquisition payments kick in if Axiom's 2008 revenues hit €13.5 million ($21.5 million) this year.

Comptel, which boasts hundreds of mobile operator customers for its OSS, generated revenues of €82.4 million ($131 million) and an operating profit of €16.25 million ($26.3 million) in 2007. It said the Axiom deal would result in annual cost savings of €2 million ($3.2 million), incur a one-time cost of €1 million ($1.6 million), and be neutral to Comptel's earnings this year.

Comptel, which has strengthened its hand before with acquisitions, saw its share price dip by just 1 euro cent to €1.54 on the Helsinki exchange following the news on Monday. (See Comptel Enhances Its OSS .)

— Ray Le Maistre, International News Editor, Light Reading

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