Ericsson Buys Telecom Biz of Chinese IT Firm

Ericsson may be cutting jobs in Sweden, but it's growing in China thanks to its acquisition of the telecom business of Sunrise Technology, announced on Monday. (See Ericsson to Cut 2,200 Swedish Jobs.)

Ericsson AB (Nasdaq: ERIC) said the purchase of Guangzhou, China-based Sunrise Technology's telecom business will boost its IT services capability in the region as around 1,000 of the service provider's employees join the Swedish equipment giant.

Ericsson plans to integrate the OSS/BSS company's telecom assets into its Global Services business unit by the second quarter of this year. After the deal -- terms for which were not announced -- is complete, Sunrise Technology will continue to exist as a separate entity serving industries outside of telecom.

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Ericsson says the Sunrise employees it's gaining are experts in IT consulting, systems integration for charging and billing systems, customer relationship management and business intelligence/analytics solutions, and application development and maintenance.

The vendor has been focused on cutting costs, but also growing its business in those areas it has deemed strategic, including IP networks, cloud, TV and media, OSS/BSS and industry and society. Sunrise will support its ambitions of becoming a global ICT leader, helping it target the fast-growing Chinese mobile market, where it says many operators are just beginning to replace their legacy IT systems with next-generation technologies. (See Ericsson Feels US Capex Squeeze in Q4.)

This is far from the first acquisition has made in the OSS/BSS space. The vendor acquired Telcordia in 2012, TeleOSS and Telcocell in 2013, GEOSS in 2014 and TimelessMIND earlier this year to bolster its status in the software business. (See Ericsson Buys TimelessMIND OSS Assets, Euronews: Ericsson Boasts IT Services Progress, Say Goodbye to Telcordia, Ericsson Closes Acquisition of TeleOSS and Ericsson Acquires Telcocell for BSS.)

Ericsson's share price climbed 1.9% to $12.89 Monday after the acquisition was announced.

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atiller 3/18/2015 | 12:11:53 PM
"Just beginning to replace their legacy IT systems" This looks like wishful thinking to me.  Chinese operators have made continual investments in their OSS/BSS for many years and actually have very advanced systems (much less spaghetti code than most Western operators, and far ahead in real-time self service, contextual awareness and other hot IT areas).  The comments about customization are relevant, though.  The OSS/BSS business works in a very different way in China, and operators have heavily customized solutions.  But then again, if you have to customize your BSS for every operator in China it's still not too bad (China Mobile's subscriber base is almost 3 times the size of the whole US market on its own).
R Clark 3/18/2015 | 10:23:04 AM
Re: ICT M&A This all happened five or so years ago. The complaint wasn't about any specific customisations, just that they were from the POV of the foreign vendors labour-intensive, expensive, and not really necessary. The Chinese operators aren't known for their clever pricing and bundles, so you'd think they might have a point.
sarahthomas1011 3/17/2015 | 12:12:00 PM
Re: ICT M&A Interesting, R Clark. It seems like most of Ericsson's acquisitions in OSS had a different geography angle to them, but that makes sense for China in particular. Do you know what kind of customization they are looking for, in general?
R Clark 3/16/2015 | 11:00:04 PM
Re: ICT M&A This is pretty much the only way for foreign companies to get in to OSS/BSS in China. Most if not all of the big foreign companies have pulled out, partly because it's rigged against them, but also because the provincial operators demand extreme kinds of customisation which the local guys are happy to do but are hardly worth the while of the big players.
sarahthomas1011 3/16/2015 | 1:12:58 PM
ICT M&A Interesting that China has 1.285 billion mobile subscriptions, but is still at the beginning stages of updating its OSS/BSS. This makes the market incredibly important for vendors like Ericsson. Targeting China by aquiring an established company there gives it a foot-in-the-door and makes more sense than going it alone. Ericsson is clearly a fan of this M&A strategy, particularly for its ICT business.
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