Ericsson (NASDAQ:ERIC) said it will acquire OSS/BSS vendor Telcordia for $1.15 billion, giving Ericsson another edge in the services market.
Ericsson said it reached an agreement with Telcordia's private owners, Providence Equity Partners and Warburg Pincus, for an all-cash deal. Around 2,600 Telcordia employees will join Ericsson via the transaction, and the companies said they expect the deal to close in the fourth quarter of this year.
The acquisition will "reinforce and expand" Ericsson's position in the OSS/BSS markets, Ericsson CEO Hans Vestberg said during a conference call with investors. Vestberg said the acquisition will help Ericsson cash in on operators' efforts to handle increased network traffic and through differentiated and tiered billing. "You need to upgrade your operating systems and BSS to meet the consumer demands of more affordable smartphones and how everything is going mobile," he said.
Telcordia has over 200 customers in 55 countries, including a mix of wireline and wireless customers. Some of the company's North American customers include AT&T (NYSE:T), Verizon (NYSE:VZ) and Qwest Communications.
Vestberg also said the deal will help Ericsson on the managed services front; in the United States, Ericsson currently manages the networks of Sprint Nextel (NYSE:S) and Clearwire (NASDAQ:CLWR). The Ericsson chief said the deal will allow Ericsson to sell software, do consulting work for OSS/BSS applications and conduct large-scale transformations.
Telcordia began as Bellcore after being spun off from the old AT&T. It was sold in 1995 to SAIC and then sold to private equity firms in 2004 for $1.35 billion. During the fiscal year that ended Jan. 31, Telcordia had revenue of $739 million.
For more:
- see this release
- see this GigaOM post
Special Report: The guts of wireless: OSS/BSS market on the brink of change
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