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Summary

Ericsson has announced the acquisition of the telecoms business of China-based Sunrise Technology to beef up its IT services capabilities in China. With telcos’ massive rollout of LTE networks in China in the last two years, attention is now shifting to upgrading their existing business and operations support systems (B/OSS) in order to monetize and manage the new services that LTE enables them to deliver. Ericsson has identified this opportunity and is strengthening its services capabilities to compete effectively in the local Chinese market.

Ericsson prepares itself for the increase in demand for transformation services in China following LTE rollout

Ericsson has been acquiring businesses to strengthen its product and service portfolio. In the B/OSS domain, the company has acquired Telcordia, TeleOSS, Telcocell, GEOSS, and, in 2015, TimelessMind. This time it has decided to focus its acquisition activities within the IT services domain. The 1,000 employees from the telecoms business of Sunrise Technology will boost Ericsson’s IT services capabilities in IT consulting, systems integration for charging and billing systems, customer relationship management systems, and business intelligence and analytics solutions.

The interesting part of this latest announcement is the focus on China. Mainland China was one of several regions that accounted for the sales growth in Ericsson’s mobile broadband business. The majority of 4Q2014 business was related to continued LTE deployments in China. As the rollout of these LTE networks slows down, the Chinese-based telcos’ focus will move to monetizing the new services that LTE allows them to provide to their subscribers. As highlighted in our report TheImpact of LTE on Operators’ OSS and BSS Domains, the delivery of these new services will place a high demand on existing B/OSS systems to manage and bill for the new services, such as real-time access to online applications and streamed video services. The demand for improved customer experience will require these once separated entities (B/OSS) to become closely integrated for end-to-end control, personalization, and management of these services.

In addition, to maintain growth in Ericsson’s Global Services business (which accounted for 43% of its overall revenues in 2014 owing largely to contributions from acquired IT service assets in the US and Europe), the company has judged that now is the time to buy up assets in China and enhance its local delivery capabilities.

The demand for transformational activities is visible not only in China but across the globe. This demand has made the telecoms industry attractive to IT service players such as Accenture, Atos, IBM, Tech Mahindra, and Wipro. The competition for contract wins will intensify, and it will be the players that can demonstrate their capabilities in terms of skills in and understanding of the telecoms environment that will succeed.

Appendix

Further reading

“Ericsson gets cloud billing clout with MetraTech acquisition,” TE0006-000918 (July 2014)

“Ericsson and SAP produce secure open mobility platform,” IT0024-000109 (September 2014)

The Impact of LTE on Operators’ OSS and BSS Domains, IT0024-000007 (March 2014)

Author

Adaora Okeleke, Analyst, Telecoms Operations and IT

adaora.okeleke@ovum.com

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