Telus International spends big on US AI firm Lionbridge

Telus International has made another acquisition ahead of its forthcoming IPO, announcing the C$1.2 billion purchase of Lionbridge AI.

The Canadian company said the debt-and-equity deal – which is worth around US$935 million – will help accelerate its digital transformation push, adding key artificial intelligence capabilities to its portfolio. Lionbridge AI, which is based in Massachusetts and is currently a division of privately-held Lionbridge Technologies, provides crowd-based training data and annotation platform solutions used in the development of AI algorithms for machine learning.

“With the addition of Lionbridge AI, Telus International will further progress its penetration of the fast-growing new economy services market that will enable our team to support important AI applications as demand for high-quality, multilingual data annotation continues to increase,” said Darren Entwistle president and CEO of parent company Telus. “As a unified team and company, we will be strongly positioned to meet the end-to-end needs of today’s technology hyperscalers and industry disruptors in machine learning and AI systems to develop smarter products and services, and deliver exceptional customer experiences.”

To put it simply, Telus International provides customer care and business services to customers around the globe – in various markets in the Americas, Europe and Asia, that is – and is pitching itself as a provider of next-generation digital solutions for customer experience (CX). Thus artificial intelligence is fast becoming a big deal.

Further evidence of that, if any were needed, came at Softbank’s half-year earnings announcement on Monday. The Japanese telco talked up the “arrival of the AI era” and shared countless use cases and soundbites on the matter. “Winners in AI are winners in the future,” according to Softbank’s numbers presentation. And further, “the future of humanity is in AI,” it insists.

Telus International’s current focus is likely channelled more on its own immediate future than that of humanity as a whole. It is bulking up ahead of an IPO that has been in the pipeline for the past year or so. Telus owns around two-thirds of Telus International and will retain just over half following the flotation, scheduled for the first quarter of next year, according to The Canadian Press.

The Lionbridge AI deal comes just days after the firm launched a new R&D unit known as Innovation Labs, or iLabs, with a view to using advanced technologies to create new customer experience solutions. It shared a list of such technologies, comprising augmented intelligence, robotic process automation (RPA), natural language processing (NLP), big data and analytics, cloud computing, software-defined networks (SDN), IoT and blockchain. Earlier this year Telus International completed the €915 million (C$1.3 billion) acquisition of Berlin-based call centre solutions specialist Competence Call Center. When it announced the deal in late 2019, Telus said it would add significant scale and diversity to Telus International, not least because of CCC’s client base in 11 European countries, and would increase its enterprise value to around C$5 billion. As well as positioning the firm for IPO, the CC deal would boost revenue and earnings, the company said.

Indeed, in its third-quarter financial report published last week, Telus reported 1.6% growth in adjusted EBITDA to C$495 million, driven by an increased contribution from Telus International, which was itself boosted by the CCC acquisition and organic growth.

It’s not clear what Lionbridge AI will add to Telus International from a financial perspective, presuming the deal closes at the end of 2020, as scheduled.

Operationally though, the firm has 750 employees in a number of global markets including the US, Ireland, Finland, India, the UK, Japan, Denmark, Costa Rica and South Korea. It has developed its own data annotation platform – data annotation being the process of labelling data to make it usable for AI systems – that works in conjunction with a crowdsourced community of 1 million-plus professional annotators worldwide, 30,000-50,000 of whom are deployed at any one time. Lionbridge AI annotates data in text, images, videos, and audio in 300 languages and dialects for clients including major technology companies in social media, search, retail and mobile.

The deal looks like a good move for Telus International.