Ericsson looks to acquire OSS/BSS specialist Telcordia

Ericsson today announced that it has reached an agreement with Providence Equity Partners, LLC and Warburg Pincus to acquire 100 percent of the shares of Telcordia, a global leader in the development of mobile, broadband and enterprise communications software and services, for US$1.15 billion. Closing is anticipated in Q411 with full effect Q112.

“The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced,” commented Hans Vestberg, president and CEO of Ericsson. “In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi vendor product portfolio.”

The OSS/BSS is a growing market driven by the demand for business efficiency, innovation and high quality user experience. In 2010, the market for software and systems integration is valued at about US$35 billion and is expected to show a compound annual growth rate between 6-8 per cent between 2010 and 2013. In addition, there is an attractive market for outsourced and hosted managed services, growing in the same range.

Telcordia, which is headquartered in Piscataway, New Jersey, generated revenues of US$739 million during the last fiscal year ended January 31, 2011 and employs more than 2,600 people.

The transaction is subject to customary regulatory approvals and is expected to be accretive to Ericsson earnings per share within 12 months after closing.