BILLING COMPANIES DIVERSIFY, CONTINUE TO GROW BUSINESS

Amdocs will pay $30 million to enter the billing market in China through the acquisition of privately held Chinese billing and customer care provider Longshine Information Technology Co. Amdocs also announced last week a project with HP China to provide integrated billing for Beijing Mobile.

With a projected compound annual growth rate over 10%, the China market is beginning to resemble other developed markets, said Mike Couture, vice president of marketing for Amdocs. Yankee Group expects the number of mobile users in China to exceed 500 million by 2008.

Longshine serves three out of the four largest service providers in China: China Unicom, China Telecom and China Netcom. Its 120 million subscribers total one-fifth of the number of subscribers Amdocs currently supports.

“That's a pretty significant number of subscribers,” Couture said.

Zhangjun XU, CEO of Longshine, will continue to run the new Amdocs division and its 800 employees. Longshine has provided billing, customer care, business intelligence and settlement systems as well as integration and implementation services since 1996. It is headquartered in Beijing and has a presence in more than 15 provinces across China.

Amdocs plans to continue selling Longshine products in China but will supplement the portfolio with its Amdocs 6 suite of products as well as apply its own best practices. Couture called the acquisition a two-sided coin, where on one side Amdocs recognized the market is increasingly looking for the types of solutions Amdocs offers, but also realized it needed a local presence to deliver them.

“Doing business in China is different.” Couture said. “You really need a local presence.”

Both Convergys and CSG Systems penetrated the China market more than a year ago. In April of 2003, Convergys sold its Activation Manager software to China Unicom Guangdong, a provincial operator of China Unicom and second-largest wireless carrier in China. In early 2004, CSG Systems and IBM deployed the CSG Kenan/BP billing platform and Data Mediation solution at Beijing Telecom.

However, said Joseph Levine, senior analyst with Yankee Group, “Amdocs is the first to do something in China on this scale. It puts them on a very strong footing overnight.”

The footing got stronger on the same day that Amdocs and HP China announced a joint project to provide integrated billing for Beijing Mobile, a subsidiary of China Mobile Communication Corp. HP China will act as the prime supplier on the project and work in conjunction with Amdocs to integrate Amdocs Billing 6 in support of pre-and post-paid customers for voice, data and advanced services.

Levine said both deals are significant, but “it is the acquisition that speaks to Amdocs' commitment to become a significant player in China.”

Couture said it was critical for the China Mobile win that Amdocs work closely with HP China for the local understanding of the market. “HP has had a long-standing relationship with them,” Couture said.

Earlier this month Convergys expanded its outsourcing business through the acquisition of the finance and accounting (F&A) business process outsourcing business of Deloitte Consulting Outsourcing. A spokesperson for Convergys said that even the least aggressive forecast for the F&A market is about $5 billion by 2007.

Levine said in a report on the acquisition that Yankee Group continues to see strong interest in acquisitions in the [business support system] space. He expects the acquisition trend to continue because several large vendors in the space have strong cash reserves.