Comverse BSS Acquisition Closes, Freeing Up Focus on Fourth Wave Services
July 08, 2015
Amdocs has completed its $273 million acquisition of back office giant Comverse (News - Alert)'s business support systems (BSS) business unit. For Comverse, the spinning off of the core BSS unit allows it to focus more on enabling so-called “fourth wave” of digital services, providing service providers with an innovative means of revenue.
The deal includes Comverse’s converged, prepaid, postpaid and Kenan billing assets, and adds a deeper footprint for Amdocs (News - Alert) in global geographies, including in Europe, Asia-Pacific and Latin America.
"We are delighted to be welcoming Comverse BSS customers to Amdocs, and we very much look forward to working with these customers and their partners as we build a long-term relationship together," said Eli Gelman, president and CEO. "Following this acquisition, Amdocs will be able to bring additional value, innovation and a broader range of offerings and services to many Comverse BSS customers."
The transaction gives Amdocs additional scale and expertise—making a big billing player into a veritable behemoth in that space. But for Comverse, the move is part of an overall shift in strategy.
Comverse, already recognized as industry No. 1 in voice messaging and No. 2 in SMS/MMS technology, needs to shore up its bread-and-butter services with additional, high-value services that dovetail with how the telecom market is evolving in terms of revenue generation.
Put simply, voice and messaging aren’t growth markets anymore. The Chetan Sharma (News - Alert) consulting firm noted that voice revenues have fallen below the 60 percent threshold globally—a drop that messaging and data have in the past made up for. But now, messaging revenue is declining and flat-rate data packages are taking their toll as well, leaving operators in the position of having to find new monetization paths.
According to Aashu Virmani (News - Alert), vice president of products and go-to-market for digital services at Comverse, ditching BSS in favor of leading-edge consumer services is not an abrupt shift for the company, but rather part of a holistic strategy to pivot to digital services. “We have always had the vision, but we needed the pieces to add up,” he said. “And, I think this [acquisition] gives us the means to get there.”
Enter “vertically integrated solutions that use communications as the base layer” as the next wave of services, according to Virmani. This new model of value-added services enables operators to capitalize on advanced technologies and capabilities, such as cloud, network functions virtualization and APIs, as the foundation to launch services for high-value digital application areas such as the Internet of Things, analytics, e-commerce, mobile payments, home automation, e-health and more.
In one scenario, “the mobile operator provides value-added services to the subscriber through advanced messaging apps, while also monetizing the fourth wave of services by providing the network services (messaging, voice, video, text messaging, etc.) needed for the mobile app developers’ services to be utilized,” Virmani explained.
In total, the fourth wave is estimated by industry experts to present anywhere from a $500 billion to $1 trillion market opportunity. Comverse’s move away from billing and BSS will free up its resources to focus on capturing share here early as consumption trends converge.
“The trifecta of fast broadband networks, well-designed mobile computing devices and the insatiable supply of content, applications and services has unleashed consumer demand for more like never before,” Chetan Sharma noted.
Edited by Maurice Nagle
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