Ericsson (Stockholm, Sweden), a vendor of telecommunications technology and service, Tuesday announced that it has reached an agreement with Providence Equity Partners, LLC and Warburg Pincus to acquire 100 % of the shares of Telcordia (Piscataway, N.J.), a company that develops mobile, broadband and enterprise communications software and services, for $1.15 billion. Closing is anticipated in Q4 2011 with full effect in Q1 2012.
This will be Ericsson’s second major acquisition in recent months, having just recently acquired the M2M service platform of Telenor Connexion in April.
Hans Vestberg, President and CEO, Ericsson, says, "The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced. In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi vendor product portfolio."
Telcordia generated revenues of $739 million during the last fiscal year ended January 31, 2011 and employs more than 2,600 people.
The transaction is subject to customary regulatory approvals and is expected to be accretive to Ericsson earnings per share within 12 months after closing.
One of the main challenges for operators is how to handle the growth in mobile and fixed broadband traffic, as well as the new types of connected devices, services and applications and the high expectations on user experience, while at the same time increasing the efficiency in business and operations. According to Ericsson, OSS and BSS are critical areas to handle this challenge and to simplify the processes that support the business. They drive the customer experience and serve as the engine to monetizing traffic, offerings and products that operators sell.
The OSS/BSS is a growing market driven by the demand for business efficiency, innovation and high quality user experience, according to Ericsson. In 2010, the market for software and systems integration is valued at about $35 billion and is expected to show a compound annual growth rate between 6-8 % between 2010 and 2013.