The pattern of mergers and acquisitions highlighted in Analysys Research’s analysis of the telecoms IT sector during 2006 (Transforming the vendor landscape: mergers and acquisitions in the BSS/OSS market during 2006) has continued in the first quarter of 2007.
On the one hand, vendors such as Oracle that have a heritage in enterprise IT (and for whom telecoms is just another vertical sector) have sought to develop a service delivery framework for operators, by offering applications (such as CRM and billing) pre-integrated with underlying database technology (Figure 1). Oracle’s first major acquisition of 2007, business intelligence (BI) software provider Hyperion Solutions for USD3.3 billion announced on 1 March 2007, fits this pattern as business intelligence is set to become more of a strategic tool for telcos (see Business intelligence as a strategic tool for telcos).
| Company acquired |
Assets acquired |
Date announced |
Terms |
| Hyperion Solutions |
Business intelligence software |
March 2007 |
USD3 billion |
| SPL |
CRM and billing, enterprise asset and work management, mobile workforce management, outage and distribution management |
November 2006 |
Not disclosed |
| Stellent |
Content management software |
November 2006 |
USD440 million in cash |
| Sunopsis |
Data integration |
October 2006 |
Not disclosed |
| MetaSolv |
OSS (service fulfilment) |
October 2006 |
USD219 million in cash |
| Sigma Dynamics |
Real-time and predictive analytics |
August 2006 |
Not disclosed |
| Telephony@Work |
Hosted contact centre (underlying platform of Siebel Contact OnDemand) |
June 2006 |
Not disclosed |
| Portal |
Billing software |
June 2006 |
USD220 million in cash |
| Net4Call |
Parlay/OSA service delivery components |
April 2006 |
Not disclosed |
| Sleepycat |
Database software |
February 2006 |
Not disclosed |
| HotSip |
Infrastructure software and SIP-enabled applications |
February 2006 |
Not disclosed |
| Siebel |
CRM software |
January 2006 |
USD6 billion |
Figure 1: Acquisitions by Oracle, 2006–7 (Source: Analysys Research, 2007)
On the other hand, Subex Azure's acquisition of OSS provider Syndesis for USD164 million (announced in January 2007) was typical of established BSS/OSS vendors, who are building up as comprehensive a portfolio of point solutions as they can to solve operators’ particular challenges, for example in interconnection, and service provisioning, activation and assurance systems for new services (Figure 2).
| Company acquired |
Assets acquired |
Date announced |
Terms |
| Syndesis |
Service and policy management, provisioning, activation, inventory management, customer care, network maintenance, service and network reporting |
January 2007 |
USD165 million in cash |
| Azure |
Azure’s revenue assurance and interconnect billing software |
May 2006 |
USD140 million (90% in stock) |
| Mantas |
Fraud management |
March 2006 |
At least USD350 million, comprising 40% cash and 60% stock plus up to USD70 million subject to financial performance |
Figure 2: Select OSS mergers and acquisitions involving Subex Azure, 2006-7 (Source: Analysys Research, 2007)
Subex Azure may have hit upon a growth area in the telecoms IT market through this focus on OSS point solutions. The preliminary evidence from announced contracts in 2006 certainly indicates brisk activity in OSS sectors such as service activation, service assurance and service provisioning; more than 67 contracts were announced in the second half of 2006, up from 46 in the first half of 2006.
How will the market evolve in 2007?
Although not all vendors are using an acquisition-based strategy for growth, supply-side consolidation seems set to continue through 2007 in what promises to be a complex, and at times rather messy landscape for operators that are seeking to select suppliers and independent software vendors and systems integrators that are seeking partners. In addition to the diverse approaches of traditional BSS/OSS players and new entrants from enterprise IT environments, operators will also have to contend with the results of 2006 'mega mergers' among network equipment providers, most notably Alcatel-Lucent and Nokia Siemens Networks.
Operators should weigh up the benefit of acquiring a framework solution (such as a best-of suite) against the benefit of a best-of-breed solution. Operators must quickly establish how rationalisation of product lines may affect their own BSS/OSS implementations, and demand clear long-term roadmaps from vendors that have recently acquired or merged. While a framework solution may involve less integration work, components may not necessarily work more effectively together unless the acquirer has invested in sufficient developer resources. Additionally, some frameworks may not offer cutting edge technology, but merely a suite of adequate components. Operators need to be careful and look at exactly what they are getting within the offering – if they did not rate a component product highly before it was acquired, they will need evidence that the acquirer has improved its performance subsequently.
