Ericsson Snaps Up Telcordia To Expand Telecom Software, Services
The move will expand Ericsson's footprint in operations support systems (OSS) and business support systems (BSS). Telcordia, based in Piscataway, N.J., is owned by private equity firms Providence Equity Partners LLC and Warburg Pincus, and the deal calls for Ericsson to acquire 100 percent of Telcordia shares from those investors.
According to a statement, Telcordia generated about $739 million in revenue for its fiscal year ended Jan. 31, 2011. The deal is expected to close by the fourth quarter of 2011, and about 2,600 Telcordia employees will join Ericsson.
The acquisition finds Ericsson hoping to capitalize on growing opportunity in the OSS and BSS segments, which drive efficiency in how networks handle mobile and fixed broadband traffic. According to Ericsson, the market for software and systems integration related to OSS/BSS was valued at $35 billion in 2010 with an expected compound annual growth rate (CAGR) between 6 and 8 percent over the next three years. Opportunities in outsourced and hosted managed services are also growing in tandem, said Ericsson.
"We have global presence and scale, global services capabilities and superior knowledge about networks and network performance, as well as an already established position in the OSS/BSS space," said Hans Vestberg, Ericsson's president and CEO, in a statement. "It is a perfect fit."
Telcordia was acquired by its private equity owners in 2004 from SAIC Inc. for about $1.35 billion.
"We are confident that the company will benefit from becoming part of Ericsson, a clear global leader in providing technology and services to telecom operators," said Providence and Warburg in a joint statement.