Ericsson buys Telcordia for $1.15bn

Ericsson has announced its purchase of OSS/BSS giant Telcordia in a $1.15bn all cash deal. Ericsson CEO Hans Vestberg said the deal reflected the growing importance of operations and business support systems in an environment where “more and more devices are connected, services become mobile and new business models for mobile broadband are introduced.”

Vestberg also pointed to Telcordia’s established position in North American and other markets as well as its “good multi-vendor product portfolio” as key elements of the deal. “We have global presence and scale, global service capabilities and superior knowledge about networks and network performance, as well as an already established position in the OSS/BSS space,” he said. “It is a perfect fit.”Telcordia CEO Mark Greenquist said that the deal would drive the joint expansion of offerings to “manage the world’s most dynamic networks.”

As part of the deal, which is expected to take full effect in the first quarter of 2012, approximately 2,600 Telcordia employees will join Ericsson. According to Ericsson, OSS and BSS are critical to the success of operators seeking to handle data traffic growth and device proliferation whilst simplifying the processes that support the business. Ericsson said that the market for software and systems integration in 2010 was worth about $35bn and expected to show a compound annual growth rate of 6-8 per cent through 2013. The company added that “there is an attractive market” for outsourced and hosted managed services, growing in the same range.

Telcordia’s owners, private equity firms Providence and Warburg Pincus, put the company on the market earlier this year having acquired it for $1.35bn in 2004.