Billing bargain: Amdocs makes suite deal with service bureau purchase

Amdocs entered the acquisition arena again, this time opting for an outsourcing operation, International Telecommunication Data Systems. For $182 million, Amdocs will acquire the 9-year-old service bureau, which has an extensive list of wireless service provider clients.

With two previous outsourcing customers, Amdocs is no stranger to the business, but outsourcing is not the company's strong suit. Approximately 85% of Amdocs' revenue comes from customizing its Ensemble billing and customer-care software.

This service bureau play expands market share into the small and mid-tier carrier space that previously couldn't afford Amdocs' hand-crafted work.

"Now Amdocs has unique solutions for in-house and outsourcing the full spectrum of telecom services," said Avi Naor, president and CEO of Amdocs.

ITDS processes about 9 million telephone invoices each month and has premium wireless customers such as MCI WorldCom, Nextel Communication and Omnipoint. The company has been migrating customers to its new Xcede product, but Amdocs' executives plan to move all customers to the Ensemble software in the future.

"The service bureau capability makes Amdocs a more comprehensive solutions provider," said Paul Hughes, senior analyst at The Yankee Group. "Not everyone wants to build a solution in-house.

Wall Street's reaction has been mixed. The low purchase price has confounded onlookers and some insiders have questioned if ITDS' board of directors will approve the plan. The situation also is ripe for another suitor to enter the picture with a sweetened bid.