Is Telcordia Preparing for a Sale?
Last month, talk emerged that the OSS giant had held discussions with ERP (enterprise resource planning) giant SAP AG (NYSE/Frankfurt: SAP). (See Telcordia Up for Grabs Again?.)
According to Light Reading sources within the U.S. investment community, Telcordia's owners "have a pitch book out" on the whole company, and on at least two of its business units -- Common Language, which generates annual sales of about $50 million, and Government Business, which generates about $20 million in revenues annually.
And just last week, as part of its latest quarterly report to analysts, Telcordia noted in its financial documents that it has recently adopted an incentive plan "that pays employees upon the occurrence of certain business initiatives that may include asset sales or other business arrangements," according to an email sent to Light Reading by an industry source.
At least one industry analyst believes a move by SAP for Telcordia would make sense. In a recent research note, Lehman Brothers analyst Jeffrey Harlib wrote: "We believe the logic behind a potential transaction makes sense, as Telcordia would give SAP an important foothold in the telco OSS market and potentially deliver a comprehensive ERP solution to telco providers (SAP already has a significant CRM presence)."
Any such deal would be just the latest in a string of major OSS takeover deals that is transforming the shape of the telecom software market. (See M&A Reshapes OSS Sector.)
Should SAP, or any other company, make a move for Telcordia, they would own one of the single biggest players in the OSS sector. (See Who Makes What: OSS .)
Even with its revenues declining year on year, Telcordia is still on course to generate revenues of $730-$740 million in 2006, and has been busy positioning itself as a must-have partner for carriers and equipment vendors in the high profile IMS (IP Multimedia Subsystem) and SDP (Service Delivery Platform) solution markets. (See HP, Telcordia Hop SDP Bandwagon, Telcordia Lands SDP Deal, Telcordia Boasts IMS OSS, OSS Firms Jump on IMS, and IMS, SDP Revolutionize OSS.)
Telcordia, which is best known for providing the management systems underpinning the RBOCs' legacy networks and running the much-loathed Osmine process, was acquired by two private equity firms in March 2005 for $1.35 billion. (See HQ Sale Funds Telcordia Deal and Telcordia Purchase Closes.)
Telcordia had not responded to questions as this article was published.
— Ray Le Maistre, International News Editor, Light Reading