CSG Systems International Inc. last week completed the acquisition of Lucent Technologies' billing and customer care assets, a $300 million cash deal that makes the company a true international player.
Lucent's billing services, purchased by that company in 1999 from Kenan Systems for $1.48 billion, is heavily involved in wireless and wireline telephone business overseas. The business brings with it 200 new clients in 22 countries, according to CSG CEO Neal Hansen.
?Over 90% of our business has come from the domestic video and broadband sectors, including cable and satellite,? Hansen says. ?Now that business will represent about 60% to 65% of our entire business.?
But that doesn't mean domestic cable and satellite providers need to worry that CSG will abandon them, asserts Ed Nafus, CSG's president of broadband services.
?We'll be able to play more aggressively in a number of areas following this deal,? Nafus says. ?We have more telephone and wireless experience now, and we can parlay that both domestically and internationally.?
Yankee Group analyst Jason Briggs says that the blending of Kenan's and CSG's different operating styles will give cable operators and satellite providers more flexibility. Kenan primarily sells its software and training to companies wanting to handle billing and processing in-house, and CSG tends to handle the billing and outsourcing services for clients.
?If a cable operator wants to take his billing services in-house, the Kenan component will make it easier for CSG to offer that kind of service,? Briggs says. ?Conversely, CSG's expertise will expand Kenan's business as well.?
To date, CSG has not had much luck in luring the business of domestic analog telephone billing and customer care.
But Hansen and Nafus do believe that IP telephony has a big role to play for operators ? and CSG ? going forward.
?We spend an average of 12% of our gross revenues each year on research and development; last year all of that was spent on developing broadband products and services,? Hansen says. ?IP telephony will be huge, and we're putting a hell of a lot of resources into developing products and services for that business.?
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