Intec eliminates competition with Ericsson interconnect billing acquisition

Intec Telecom Systems maintained its leadership position in the global interconnect billing space the old-fashioned way this week: they bought it. Intec acquired Ericsson’s Settler interconnect billing unit and 31 of its employees for approximately $5.1 million.

The acquisition will give Intec a presence in more foreign markets including China where Intec vice president Alan Healy said, “Ericsson hasn’t sold [its wholesale billing product] yet, but has significant pending business that we expect to see materialize.”

Ericsson also will become an exclusive reseller of Intec wholesale billing products. As a bonus, Intec also picks up EDS as a distribution channel.

“Obviously there was an interest on our part to eliminate the competition,” Healy said. “But it was really [about] the ability to do it with the acquisition being cash flow positive on day one and having a return on investment in no more than three years.”

To make it cash flow positive, Intec right-sized the Ericsson business unit, bringing onboard 24 developers and seven pre-sales and product management people.

Healy said Intec helped Ericsson shed itself of what had become “a less than elegant ingestion of the EHPT business” when the company’s relationship with HP fell apart. HP held a stake in EHPT until Ericsson acquired HP’s remaining 19% interest in September of last year.

In addition to eliminating some competition and expanding its geographic footprint, Healy said the acquisition will help reduce the amount of competitive price-cutting in the interconnect billing space.

For now, Intec will continue to offer first-level support through existing contracts with HP and EDS as well as its acquired team from Ericsson. The former Ericsson team will remain in Goteborg, Sweden and will provide higher-level product support.

Intec will support the Settler product into 2005 and will deliver the next scheduled software release on time by the middle of next year. In 2004, Intec will begin offering a transition to a new next-generation platform, which the company has code-named Hercules. Intec also plans to migrate its existing Interconnect customers to the new platform.

“We are giving Ericsson’s customers not only next year’s roadmap, but a new next generation product the following year,” Healy said.