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Redknee buys Orga and the killing of billing

DisruptiveViews

DisruptiveViews

June 24, 2015 Redknee CEO, Lucas Skoczkowski is a brave man. Highly respected in Canada, his acquisition of NSN’s BSS assets in late 2012 was seen as brave, for sure, but there were questions. NSN had 130 communications service providers as customers, including half of the top mobile operators in the world. The problem was that the technology was not, to be kind, leading edge. There were also questions about the level of debt Redknee took on as a result of that manoeuvre. There were some in the industry that believed the answer to be ‘too much, way too much.’ As our own Ed Finegold said at the time, “how fast can you chew, Lukas?”

Orga Systems had the opposite problem to Redknee. It had software that was very much leading edge. Those that implemented it, loved it, but like Metratech before it, it had lost its focus. Why? Because it could support almost any business model that required real-time responsiveness combined with a recurring revenue model. Like Metratech, Orga sold its solutions to utility companies, smart metering companies and cities and, therefore, lost focus with its traditional telco market.

Analysts, too, were often left wondering exactly what Orga did. Its massive marketing budget showed it in the best light at trade shows but it was not always clear what message Orga was trying to send out. Maybe those millions of euros in marketing helped its demise into insolvency? That and offices in Europe, Middle East, Africa, the Americas and Asia-Pacific with over 500 staff may have been contributing factors, but even with turnover of 60 million euros, and recurring revenues of over 45 percent, it couldn’t keep going.

Does Redknee buying what was left of Orga make sense? Absolutely, it makes more sense, in software and software engineering terms than the NSN purchase that essentially brought a mass of customers either transforming their BSS or planning to. Now Redknee has the customers and some advanced software that is very much worth selling to them. It also positions the company well to address the non-telco markets that Orga was capturing, albeit unprofitably.

Orga’s customers, including companies as diverse as BMW, America Moviles, Astelit, Avea, Telecom Italia Group and Meralco Philippines, should be well pleased that Redknee has stepped in. One stand-out after its acquisition of NSN was the effort made to talk to each and every existing customer assuring them of Redknee’s commitment to them – mostly by Skoczkowski personally.

The underlying issue with the recent spate of mergers, acquisitions and insolvencies is that the BSS sector, particularly billing, is under extreme pressure. Billing companies, once the proud bastions of the ‘crown jewels’ of every telco are becoming anything but ‘billing’ companies.

I remember introducing Amdocs at an event years ago as a leading billing company and being rebuked soundly by its marketing people as it tried, eventually successfully, to shed that mantle. Even Redknee, in its press release announcing the Orga acquisition, calls itself “a leading provider of real-time monetization and subscriber management software.”

Real-time or online charging has replaced billing, monetization is the catch-all phrase, and they are often coupled with policy management, CRM, order management, carrier billing and service delivery so vendors can offer a holistic ‘BSS’ environment to potential customers. Billing may not be dead, yet, but it sure is taking a hammering.

It begs the question of what may befall the myriad of smaller billing vendors and new players in the carrier billing and charging space. Getting new tier one and even tier two business will surely be a tall order for them. Will they survive with their existing customer base and new small customers and hold on for acquisition or will they be trampled by what is developing into a small group of very large players intent on market domination.

Those that have been around this industry for more than fifteen years will see similarities to past market activity. The formation of big oligopolies encouraged new, smaller, innovative players to emerge in the early days of convergent billing. Today we have four or five big players – the likes of Netcracker, Amdocs, Ericsson, Redknee and Oracle – trying to dominate. Will there be space for others? Time will tell.

Read our interview with Lucas Skoczkowski on his plans for Orga/Redknee.

For access to the full article, please click 
here.

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:

Kristin Donelson
Kristin.Donelson@redknee.com
+1 905 625 2190

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