Subex buys out Alcatel division

Subex Systems Ltd, the Bangalore-based software product company that addresses fraud management and revenue maximisation for telecom companies, has announced its acquisition of the fraud management group (FCG) of France-based telecom infrastructure major, Alcatel.

This all-cash deal is valued at $3 million, of which 15 per cent of amount would be paid as and when Alcatel sells Subex's products within a set time-frame.

With this acquisition, Subex has dethroned Hewlett-Packard to become the world's largest vendor for fraud management software among telecom companies by taking into account the number of customers and software installed.

The company's board of directors had recently approved the proposal to raise $10 million through foreign currency convertible bonds.

While this process is expected to be complete within a month, the acquisition of Alcatel's FCG is part of the overall strategy to acquire companies with the capital being raised through these bonds.

The acquisition adds nearly 30 new clients to Subex's existing 39 clients. Also among the new clients who are coming on board are 18 live clients who are already paying maintenance revenues to Alcatel.

Though revenues from this acquisition will factor into the company's balance sheet only from the next fiscal onwards, Subex will be the global partner for Alcatel to provide revenue maximisation solutions.

Among the 30 carriers who are coming on board include Tier-I carriers like Tiscali Italy, Vodafone Ireland, Colt UK, Thus UK and Energis UK among others.

"The trust that Alcatel has placed on us indicates that we have the capability to manage the revenue assurance needs of their existing and future clientele. We would also be retaining some of the employees of Alcatel's FMG and place them in our new facility in UK," Subash Menon, president and CEO, Subex Systems, said.

Subex's new sales and support office for European clients is coming up in London and is expected to be operational within the next two months. Considering the emphasis on revenue leakage among telecom companies, this acquisition also marks a significant entry for Subex into western Europe.