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Redknee gets a bargain with Orga purchase

TM Forum Inform

TM Forum Inform

June 26, 2015 News that Redknee has acquired its German rival Orga Systems comes as no big surprise for a couple of reasons. Not only is it the latest instance of the consolidation that has been taking place in the real-time charging and policy sector over the last few years, but also because Orga has been in financial difficulties for some time culminating in bankruptcy in April 2015.

Even so, the price tag of around $42.7 million was cheap to say the least. Redknee got a lot for its money and should benefit in a number of areas.  Redknee’s official line is that when integrated with its real-time charging, policy, billing and customer care platform, the combined Orga product suite will enable Redknee to accelerate and expand its reach into the growing market for IoT monetization.

Looking more closely however, the real value of the deal to the Canadian supplier lies partly in Orga’s catalog, order management across a range of multi-play offerings; areas which Redkee has not thus far been active.

The other beneficial area is that of reach into other verticals. Although Redknee has recently started looking at other verticals, Orga’s work with energy utility companies and its work with BMW on the connected car gives Redknee a firm footing outside the communications vertical and some solid customer references to boot. This is particularly important says Redknee’s Vice-President, Marketing Chris Newton-Smith, because the communications sector is a slow-growth market and IoT is opening up opportunities in other verticals far more quickly, particularly in the area of real-time charging.

It’s hard to know the exact reasons why Orga Systems failed so spectacularly, particularly as on paper at least it was doing very well. Orga Systems was a pioneer in the area of real-time charging and customer management software and its 2014 revenue were reportedly around $67 million, with recurring revenue of greater than 45%. Information is scant, but it is thought the company had been losing money, going into administration when banks refused to extend a $28 million credit line.

While Orga systems will be completely integrated into Redknee, some elements of the old company will remain, such as the product names. Newton-Smith says he doesn’t believe in changing product names in such a situation as it is too costly and ultimately is not worth the effort.

It is likely too that at least some of the Orga management team will remain with the newly-merged company. At present it is thought that CEO Wolfgang Kroh and CTO Ralf Guckert will move across to Redkee, although the company’s plans for the other 500+ Orga Systems employees are unclear. It is expected that the full implications of the acquisition for both product lines and staff will become clearer when the deal is fully closed in 4Q15.

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Media Enquiries: media@redknee.com

About Redknee:
Redknee monetizes today's digital world for communications service providers. Our market-leading portfolio of monetization and subscriber management solutions includes real-time billing, charging, policy and customer care modules and is available on premise, cloud-based, or as Software-as-a-Service. With a central focus on driving customer success, Redknee's products power growth and innovation for operators globally. Established in 1999, Redknee Solutions Inc. (TSX: RKN) can be found on the Toronto Stock Exchange. For more information about Redknee, 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:
Katelynn Thissen
NATIONAL | Equicom
T: (416) 848-1427
kthissen@national.ca