Faultline met with BSS telecoms software provider Redknee Solutions at Mobile World Congress last week, which has ambitions to challenge the giants of the OSS/BSS industries such as Amdocs, Ericsson, NEC’s Netcracker, and Huawei – but the Canadian firm could be in trouble after its revenues plummeted over $12 million in just one year.
Redknee has been boosting its real time monetization platform business over the past few years with the acquisitions of German converged billing firm Orga Systems for $42.6 million in 2015, and Nokia Siemens Networks’ BSS business for $43.4 million back in 2012. Despite this, Redknee has recently been downgraded by equities analysts following poor financial results. In June 2015 Redknee was valued as a $260 million business, but its market cap now sits at $221 million.
The company currently has negative earnings, and reported Q4 2015 revenue of $50.1 million, down from $62.6 million in the same period last year – with its support and subscription revenue staying consistent, but its software, services and other arms being responsible for the loss of more than $12.8 million in revenue since Q4 2014. Redknee has some big customers in AT&T, Vodafone, Sprint, KDDI, Swisscom, Telefonica, and T-Mobile, for example, but it’s clear that it has lost some customers, Telecom Italia being one that we have pin pointed. Ericsson has been buying up OSS/BSS players for the last 6 or so years, so if Redknee’s situation continues to worsen then we wouldn’t rule out a bid from the Swedish firm.
We were also given a demo by Redknee, which involved an interesting feature of its BSS system that it told us customers such as KDDI Japan and Vodafone in Germany and India are beginning to integrate. For example, a consumer is running low on their mobile data allowance so decides to switch to a WiFi hotspot, but then the mobile operator sends a message to the consumer’s device to warn them that the WiFi connection they are using is insecure, and at the same time pushes special offers to purchase more mobile data. This is a nice monetization feature, however it is not obvious what criteria it uses to decide if the WiFi hotspot is insecure.
In 2013, Redknee unveiled Redknee Cloud, a fully hosted billing/customer care system for supporting MVNOs on an on-demand basis. Such roots will grow far more quickly when combined with the emerging technologies of virtualized, hosted and cloud-based back office systems. These will start by making it far quicker and cheaper for network owners to set up MVNOs, and will end up by placing the real power in the mobile access business in the hands of the cloud provider, not the MNO. Companies like AT&T and Hutchison aim to perform both those roles, but they will need to watch out for Google, Amazon, Microsoft and IBM.
Redknee’s purchase of Orga reflects how the BSS industry has changed radically in the past 15 years. From largely simple voice billing, it has had to support the explosion in mobile services and subscribers, enabling MNOs to deliver multiple applications, tariffs and promotions to a single customer, while being able to manage them as one entity in the IT systems.
In separate news, Ericsson and Google announced the launch of their collaborative OTT Cloud Connect (OCC) service to enable mobile operators to connect to OTT platforms. The service aims to improve the operator-OTT player relationship by exposing their respective OSS/BSS capabilities, and Ericsson claims this will simplify the process and bring unique application-specific features to end users. The first OTT service to undergo the OCC service will of course be Google’s YouTube.
“Collaboration between operators and OTT providers will be key as we start seeing new innovative services being introduced towards the end users,” explained Diomedes Kastanis, head of technology, business unit support solutions at Ericsson. “Ericsson is strongly supportive of this approach and we believe we are in a sweet spot to play the role of an enabler to make this collaboration happen. We are very bullish about the OCC platform and very happy to have integrated with YouTube as the first video platform. We look forward to on-boarding many more OTT providers.”