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Redknee-Orga acquisition signals further consolidation in BSS space

Orga Systems

Orga Systems

July 16, 2015

Last month, Redknee announced that it would be acquiring German billing vendor Orga Systems, which declared bankruptcy earlier this year. The announcement reflects a growing trend of consolidation among BSS vendors in response to telcos’ insistence on reducing the volume of signed contracts.

As telcos continue to show favor to vendors with more complete solution offerings, M&A as a strategy to enhance and acquire new assets will become critical to vendor survival.

BSS vendors must look to mergers to stay competitive in the telecoms market. In recent years, telecoms vendors have undergone a significant amount of change and consolidation.

Following the announcement made earlier this year that Orga Systems would be filing for insolvency, Redknee announced its acquisition plans of €38 million (about $42.5 million), adding the Orga portfolio to the Nokia assets it acquired in 2012.

Canada-based Redknee, which specializes in real-time billing and monetization systems for telcos, will look to enhance its BSS portfolio with the addition of Orga Systems’ products. In addition to acquiring the BSS assets, Redknee will also take on Orga Systems’ 45+ clients across the communications, automotive, energy, and railway industries. Though in the past Redknee has operated solely in the telecoms industry, it is well prepared for its venture into new industries.

Whereas a typical non-telecoms company requires support for 1 billion real-time transactions per day, Redknee has been supporting up to 3 billion real-time transactions per hour for its telco clients. This proven success in the telecoms market will aid Redknee in its transition into new industries.

Along with its multi-industry clients, Redknee will take on Orga Systems’ 500+ global employees. This additional support will ensure that Redknee is able to continue supporting Orga Systems’ non-telecoms clients as they enhance their offerings and expand their global footprint.

By combining staff and assets and by bringing on an established multi-industry customer base, Redknee is able to ensure its longevity, which is important now more than ever in a market where niche vendors are becoming extinct.

Once the acquisition is complete, Redknee expects to have over 950 employees in R&D alone. It will use the additional staff to increase its focus on developing and enhancing its customer self-care, analytics, and real-time monetization offerings, including increasing investment into developing its IoT offering.

Redknee’s acquisition comes at a crucial time. Market conditions are becoming difficult for small vendors in the telecoms space. The vendor market has been undergoing a period of consolidation for years, the likes of which can be seen in recent announcements such as Nokia’s bid to acquire Alcatel-Lucent; Amdocs’ acquisition of Comverse; and Redknee’s acquisition of Nokia's BSS assets.

At the same time, telcos are looking to reduce capex and opex and to gain more control over their contracts. To accomplish this goal, telcos have turned to limiting the number of contracts awarded to vendors.

There has also been a noticeable shift in preference toward larger vendors that have a more complete suite of products that meets industry-specific needs and away from supporting a collection of best-of-breed applications. This has made it difficult for small, boutique vendors to compete in the telecoms space, since they can no longer rely on offering a single solution to telcos.

For smaller vendors to remain competitive under such conditions, they must look to strategic acquisitions, such as Redknee’s, that will enable them to increase their market share, enhance their existing assets, and offer a variety of products and services. 

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Media Enquiries: media@redknee.com

About Redknee:
Redknee monetizes today's digital world. We provide a complete portfolio of mission-critical monetization and subscriber management solutions, including real-time billing, charging, policy and customer care modules, which allow Communications Service Providers to charge for things in new and innovative ways and create a unique user experience. Available on premise, cloud-based, or as a Software-as-a-Service, Redknee's low-risk, flexible solutions power more than 250 businesses across the globe. Established in 1999, Redknee Solutions Inc. (TSX: RKN) is the parent of the wholly-owned operating subsidiary Redknee Inc. and its various subsidiaries.

References to Redknee refer to the combined operations of those entities. For more information about Redknee and its solutions, please go to www.redknee.com.

For additional information please contact:

Redknee Solutions:
Michaela Radman, Corporate Communications
Michaela.Radman@redknee.com
+1 905 625 2190

Investor Relations:
Conrad Seguin
NATIONAL | Equicom
T: (416) 586-1951
cseguin@national.ca