Convergys ends year on high note with Alltel buy, Sprint winback

Convergys announced this week that it has signed an extended billing contract with Sprint, one it thought it had lost to Amdocs earlier this year. The announcement comes on the heels of a $37 million acquisition of certain billing and customer care assets of Alltel including the billing of 10.5 million additional subscribers

As part of the acquisition, expected to close on Dec. 31, Convergys will begin providing customer service support for Cingular Wireless. It also increases its market share by picking up contracts for billing services Centennial Communications, Commonwealth Telephone and others, adding 10.5 million to its total.

Centennial Communications is a regional provider of wireless and broadband services in Indiana, Michigan and Ohio in the Midwest and Louisiana, Mississippi and Texas in the South. Centennial also provides wireless service to the Caribbean. Commonwealth Telephone is a provider of voice, broadband and advanced communications services to 19 counties in eastern Pennsylvania. The provider has more than 300,000 access lines and is the nation's eighth largest publicly held independent rural local exchange carrier.

More than 220 Alltel employees will move to Convergys to support the acquired billing systems and technology.

Convergys got the Alltel assets at a nice price, said Elisabeth Rainge, an analyst for IDC, adding its acquisition machine seemed strong in terms of having a process and system that allows it to keep key assets such as customers.

Rainge added that the acquisition was more of a market share play than the technology buys Convergys has made recently. “Clearly Convergys is buying not just share but also a tighter hold on the U.S. wireless billing market,” Rainge said.

Convergys confirmed that to be the case. “This shouldn’t be construed as technology we need in our solution that we will resell to the market place,” said David Dougherty, executive vice president of global information management at Convergys. “Clearly there is technology in place to support the new contracts, but the technology is not strategic for us.”

Dougherty said Convergys will support customers in their Alltel solution as long as they want to stay with it.

Convergys’ seven-year extension of a Sprint billing services, which was in the grips of Amdocs, is a big win for a Cincinnati-based provider.

“It is a strong endorsement of our technology,” Dougherty said. “Sprint has embraced the concept of our next-generation billing technology, Infinys, and we will likely be moving them to that platform.”

News of the winback came amid, or perhaps sparked, earning statements by Amdocs, Convergys and Sprint. Convergys confirmed its guidance for 2004 since the Sprint contract was scheduled to run through next year. Amdocs quickly reiterated revenue and earnings guidance of $416 million to $422 million for the first quarter of fiscal 2004. And Sprint updated its guidance to reflect in part its revised strategy to terminate development of a new billing system. Sprint said it would save $100 million in 2004 as a result.

Sprint said in a statement that in addition to the operational cost savings, part of the reason for revising its strategy was to allocate IT resources to more strategic requirements and avoid service disruptions associated with implementing a new billing system.

“Clearly, our technology and technology roadmap with Infinys played a role,” said Dougherty.

Rainge said the Sprint deal is evidence of Convergys having a good hold on the wireless market in the U.S. “Anyone beyond Convergys now starts to look more like a challenger that an incumbent,” she said.