Comptel Corporation Stock Exchange Release 21 April 2008 at 8.45 am
Comptel acquires UK-based Axiom Systems to capitalize opportunities from
operators' growing investments in IP-based services
HIGHLIGHTS OF THE AXIOM TRANSACTION
Comptel is strengthening its position as a leading provider of fulfillment
solutions for broadband, mobile and next-generation IP networks by acquiring
Axiom Systems (Axiom), a UK-based software product company focusing on the
broadband fulfillment market. The acquisition gives Comptel a strong position to
capitalize the growing investments of service providers to new IP-based
services, like VoIP and IPTV. Axiom is a specialist in IP fulfillment and has a
good market position in Europe as well as key customers in Asia-Pacific. Net
sales of Axiom were GBP 7.8 million (EUR 11.5 million) and the company was
EBITDA negative in 2007. Axiom has currently 87 employees. The net sales in 2008
are estimated to grow about 15%. Consolidation of Axiom is estimated to increase
Comptel net sales around 10% in 2008. Axiom's EBITDA impact to Comptel in 2008
is expected to be neutral before one-off items, which are estimated to be EUR 1
million.
Mr Sami Erviö, President and CEO of Comptel, comments: “I am enthusiastic about
this acquisition, since now Comptel is uniquely strongly positioned to support
its customers in automating the delivery and management of new IP-based services
like IPTV. With Axiom we are a leading provider of service fulfillment solutions
for fixed, mobile and convergent operators and service providers. Axiom has
excellent IP network competencies and has proven capabilities for next
generation service fulfillment. Together we are well positioned globally and
especially strong in Europe, Asia-Pacific and Middle East. We now have the right
competencies, the leading customers and the presence to gain market share in the
emerging all-IP network based fixed-mobile convergent telecom industry.”
TRANSACTION
Comptel Corporation is acquiring Axiom Systems Holdings Limited for a cash
consideration of GBP 7.0 million (EUR 8.9 million). Comptel Corporation pays
additional purchase price if Axiom Group's audited net sales in 2008 are more
than EUR 13.5 million. The additional price may vary between GBP 4 and 16
million. The maximum amount will be paid if Axiom Group's audited net sales in
2008 reach EUR 21.6 million. The additional purchase price comprises of both
cash and Comptel shares.
Axiom Group's balance sheet will be free of interest bearing debt and will have
a positive net working capital balance. The acquisition is financed through
Comptel Corporation's liquid assets and by raising approximately EUR 5.0 million
of debt. In case additional purchase price is paid, a maximum of 4.8 million new
Comptel shares will be issued.
The acquisition is completed on 21 April 2008 from which Axiom Group will be
consolidated. The main selling shareholders are private equity funds managed by
Geocapital Partners, Hg Capital and Axiom's management.
The annual cost synergies from the transaction are estimated to be EUR 2 million
starting from 2009. One-off items of restructuring and integration costs are
estimated to be EUR 1 million in 2008. Furthermore, Comptel expects revenue
synergies to realize 2009 onwards from cross-selling the convergent dynamic OSS
solution to existing Axiom and Comptel customer bases and by leveraging
Comptel's stronger market position outside Europe to increase Axiom's solution
sales. The project for integrating the businesses is estimated to be completed
by the end of 2008.
Mr Gareth Senior, CEO and CTO of Axiom Systems will continue in his role as the
CEO of Axiom. He has been also nominated as a member of Comptel Group's
Executive Board.
STRATEGIC RATIONALE
Telecom service providers and operators are currently investing in the next
generation IP networks in order to provide their customers a richer set of
services (VoIP, IPTV, etc.) and achieve profitable growth based on this. A
central business challenge for service providers is delivering and managing the
services for their customers efficiently and timely. To achieve this, the
operators need integrated IT systems to manage the process and information flows
when activating subscribers and services in the network (Provisioning) and
storing the required business and technical information (Inventory).
Coordinating this activity is particularly complex for (currently fixed-line)
broadband operators. They require a central system (Order Management) to manage
the process in an efficient way. With the introduction of the all-IP networks,
the service providers will be offering convergent broadband services through
both fixed and mobile channels. This is a major growth opportunity, but requires
investment in a convergent OSS (Operations Support System), where fulfillment is
a major component.
Currently broadband service based on fixed infrastructure is fairly developed
but has still substantial growth potential in Western Europe and the US. In
other markets it is still emerging. The global market for broadband fulfillment
solutions is estimated to be USD 550-650 million in 2007, whereas the mobile
provisioning market is USD 300-570 million. Both markets are expected to grow
between 10-20% annually in the next three years (source: OSS Observer).
Axiom is a recognised player in the broadband fulfillment markets. It has
special expertise in broadband and IP technology and business, and good customer
references. Axiom's product offering is an end-to-end fulfillment suite that
includes Order Management, Service Inventory, Service Activation and Active
Catalog. Its products are characterised by high-level of modularity and
configurability, allowing them to be tailored into different solutions that meet
customers' specific business needs. Axiom has 35 customers, out of which 25 are
in Europe and 4 in Asia-Pacific and 4 in North America. The clientele includes
British Telecom, Austria Telecom, Deutsche Telekom, Telecom New Zealand, Singtel
in Singapore and TeliaSonera. Axiom's software is mainly sold and delivered
through partners like Alcatel-Lucent, TietoEnator, T-Systems and Wipro.
The acquisition is part of Comptel's long term growth strategy to become the
world's leader in end-to-end Operations Support Systems (OSS) for communications
service providers and operators. Axiom provides a strong set of competencies,
technologies, valuable customers and market position supporting Comptel in the
IP broadband and convergent service provider market segments. Acquiring Axiom
complements Compttel's offering with Order Management product and strengthens
Comptel's IP technology competencies.
COMPTEL FUTURE OUTLOOK
Comptel Corporation will update the outlook for 2008 in its first quarter
interim report, which will be published 23 April 2008.
Axiom Systems
Axiom was established in 2000 when Axiom acquired Intellectual Property Rights
from British Telecom for the work Axiom's founders had been providing as IT
services to British Telecom's IP network. Axiom's head office and operations are
located in Reading, UK. It has sales offices and representatives as well as
customer services staff overseas.
Axiom has been mainly focused on Western European markets. Recently it has
started to develop business also in Eastern Europe, Middle East and Africa and
Asia-Pacific. Axiom has been particularly successful in achieving growth through
partners. Consequently, its business model has a high operating leverage as a
significant portion of its revenues are generated through pure license deals.
Axiom offers a complete fulfillment solution for different business needs of
broadband service providers and operators. The offering consists of a service
inventory, order management and activation components. Through different
combinations and configurations of these components Axiom creates business
solutions, like VoIP and IPTV provisioning, for service providers. Recently
Axiom has created Active Catalog, which is a service catalogue enabling
automatic provisioning of different solutions.
Comptel Corporation
Comptel provides Comptel Dynamic OSSTM solutions, enabling telecom service
providers to deliver services flexibly and charge for them effectively.
Comptel's expertise in inventory, provisioning and activation, mediation and
charging empowers service providers to focus on delivering the innovative
services. Established in 1986, Comptel has around 550 employees worldwide. In
2007, net sales were EUR 82.4 million and operating profit reached 20% of net
sales. Comptel has provided solutions to 260 customers with 500 million
subscribers in 85 countries. www.comptel.com
Comptel Corporation
Sami Erviö
President and CEO
For financial analysts, investors and media
Comptel is arranging an analyst, investor and press conference about the Axiom
acquisition today Monday 21 April at 10.30 am in Comptel headquarters,
Salmisaarenaukio 1, Helsinki. The meeting will be held in Finnish.
Comptel will hold an English speaking teleconference today Monday 21 April at
15.00 pm Finnish time (13.00 pm UK time) about the Axiom acquisition. The dial
number is +358 9 8248 2811, access code 8107.
Additional information:
Mr Sami Erviö, President and CEO, tel. +358 9 700 1131
Mr Veli Matti Salmenkylä, CFO, tel. +358 50 2813
Mr Samppa Seppälä, Director, IR and Corporate Communications, tel.
+358 50 5680533
Distribution:
OMX Nordic Exchange in Helsinki
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