Redknee-NSN deal motivated by customers

Peter Dykes/Informa Telecoms and Media
07 Dec 2012
00:00

Speculation over the likely purchaser of Nokia Siemens Networks’ BSS assets was ended with the announcement on 5th December that Canadian BSS solutions vendor Redknee is to acquire most of them for around €40 million, and in the process give a massive boost to its customer base.

Until very recently, Ericsson and Amdocs were being tipped as likely contenders but few pundits had seen Redknee waiting in the wings.

For NSN the deal was simply part of the contraction strategy the company announced at the end of last year and is the latest in a series of garage sales of the joint venture’s unwanted assets over the last 12 months.

For Redknee however, the purchase was all about expansion and specifically, it was about customer numbers and global footprint. Redknee is indeed acquiring most of NSN’s @Once range of BSS products, with the exception of some core network-related mediation, PCRF assets and the company’s GSM-R business, but it was very obvious during the investor’s call following the announcement that the big prize was a vastly expanded customer base.

Redknee CEO Lucas Skoczkowski, told analysts that of the 130 service provider customers that came with the deal, 90% were net new additions to Redknee’s books and that 85 of these were major operators using NSN’s converged billing platform; a core area for Redknee. He added that half of the acquired customer base consisted Tier 1 operators and that 50% of revenues generated by this group was spread across 35 companies, meaning that going forward, Redknee would not be relying on revenues from just a few large licenses.

Geographically, the deal was good for Redknee too. Of the 90 countries in which NSN’s soon-to-be former BSS customers reside, Skoczkowski said that Redknee had a presence in 40 at the most. In addition, apart from effectively more than doubling the purchaser’s global footprint, the deal has given Redknee the human resources to support its new customers in those regions with the transfer of some 1,200 NSN employees scattered strategically across the globe.

In terms of products, there is much duplication between Redknee and NSN’s BSS portfolios and Skoczkowski says that integration could take up to two years to complete, culminating in a single Redknee branded product set. Such an extended timescale suggests a process of cherry-picking followed by a phasing out of NSN products rather than integration. It is probably worth comparing the speed and fanfare with which Ericsson announced the integration of Telcordia’s portfolio into its own product set to Redknee’s two-year timeline to make an educated guess as to the true value of the acquired assets to the Canadian vendor and its likely strategy.

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