Subex Signs Asset Purchase Deal With NetCracker To Sell Activation Biz

21 Sep, 2011

Bangalore-based Subex Ltd, a global provider of operations and business support systems in the telecom space, has signed an asset purchase agreement with NetCracker Technology, a subsidiary of the NEC group, for the sale of its activation business for an undisclosed sum, the company has announced in a statement to the Bombay Stock Exchange on Tuesday.

"Service providers are looking for strategic partners who can deliver complete, end-to-end fulfilment stack. We expect this acquisition to fit seamlessly within our offerings and expand our ability to meet customer requirements," Andrew Feinberg, president and CEO of NetCracker Technology, commented on the deal.

On the BSE, the price of Subex shares touched an intra-day high of Rs 51 per unit on the backdrop of the activation business sale. At 12:51 pm, shares were trading at Rs 49.30 per unit, up 5.12 per cent.

The decision to sell the activation business reflects a change in the company's strategy and Subex will now focus on its core products – ROC solutions (revenue assurance, fraud management, partner settlement, data integrity management, etc.) and managed services.

Out of $110 million (Rs 495 crore) in total sales, the company generated $15 million (Rs 67.50 crore) in revenues from the activation business during the last financial year.

"The market is changing and so are the operator's needs, to remain competitive. Market evolution is towards solutions that allow communications service providers (CSPs) to combine data with insights to trigger customer-centric, near-real-time decisions. Subex is strategically positioned to take advantage of these growth areas through its ROC and Managed Services portfolio. Hence, we have taken a strategic decision to focus on our core products," Subex founder, chairman, managing director and CEO Subash Menon commented on the deal.

The decision and the renewed focus would enable Subex to increase its revenues by more than 20 per cent annually with positive growth in EBITDA, added Menon. The company estimates its current qualified pipeline for continuing business to be worth $350 million.

NetCracker Technology, a subsidiary of NEC Corporation, is a leading provider of telecom operations and management systems to CSPs worldwide. NEC delivers solutions in the key fields of computer, networking and electron devices, by integrating its technical strength in IT and networks and by providing advanced semiconductor solutions through NEC Electronics Corporation. The NEC Group employs more than 140,000 people worldwide.