Amdocs Buys TTS Wireless to Boost Open 5G Portfolio

Last week Amdocs announced the acquisition of TTS Wireless, a privately-owned provider of mobile network engineering services, specializing in network optimization, planning, and software-enabled solutions. The acquisition enables the combination of TTS Wireless’ field-proven operator services with the Amdocs Open 5G portfolio. This expanded offering aims to help operators accelerate and simplify deployment of 5G networks, particularly with network rollout solutions.

The impact of the acquisition on Amdocs’ diluted non-GAAP earnings per share is expected to be neutral in fiscal year 2019, and neutral in the first full year after closing. The impact on diluted GAAP EPS will not be known until after Amdocs completes the purchase price allocation. The Boards of Directors of TTS Wireless and Amdocs have approved the transaction for approximately $50 million in cash. Additional consideration may be paid later based on the achievement of certain performance metrics. Read the Amdocs press release here.

Amdocs Capitalizes on Growing 5G Services Demand

Analyst Take: Amdocs’ acquisition of TTS Wireless targets meeting burgeoning operator demand for broader professional services support in the build-out of their 5G networks. The reasons are fundamental. First, 5G networks are more complex than 4G/LTE networks in areas like digital operations enablement, multi-cloud administration, hybrid service/resource management, robust AI/ML integration, and expanded automation. As a result, operators require increased collaboration to navigate the complexities and uncertainties of their initial 5G network deployments. Second, 5G is ushering in a broad array of new digital consumer and enterprise services (e.g., AR/VR, Industrial IoT). Operators are keen on working with their supplier/services partners to hone their 5G business cases, especially in developing the blueprints essential to 5G monetization. Additionally, 5G is amplifying the challenges of cybersecurity implementation, including ensuring the protection of personal data across a growing multitude of applications and capabilities in virtual and hybrid cloud environments.

Needless to say, these are not the only challenges as each operator must overcome their own set of barriers. Regardless the telco software suppliers with the most diverse set of service offerings will be the best prepared to fulfill these evolving, distinct 5G implementation challenges.

How the Deal Benefits Both Amdocs and TTS Wireless

Amdocs needed to acquire TTS Wireless in order to rapidly boost its 5G services credentials. The move aligns with Amdocs prioritization of 5G capabilities in its portfolio development and sales and marketing strategies. Amdocs gains TTS Wireless’ IMNOS enterprise wireless network visualization solution which streamlines various network data analytic sources into a single unified platform. The growing complexity of wireless networks require an integrated platform to understand performance issues, optimization across all network layers, and plan for a seamless user experience. The integration of TTS Wireless’ INMOS platform and wide-ranging network engineering services to the Amdocs Open 5G portfolio boosts Amdocs channel resources in driving the adoption of open cloud networks for 5G network rollouts. This move also enables operators to benefit from the early 5G adoption experiences TTS Wireless has already cultivated including 2,500 5G-NR sites designed, 160,000 mobile solutions analyzed, and 1,350 in-building coverage and optimization projects. TTS Wireless’ mobile operator customers include T-Mobile/Sprint, AT&T, U.S. Cellular, Wind, and iWireless immediately boosting Amdocs’ presence in these major networks. In turn, TTS Wireless taps into Amdocs’ vast global business relations including 350 communications/media provider customers and technology and distribution ties to 600 content creators.

Amdocs Moves the 5G Needle

In combination with its impressive Q3 2019 results that included record revenue, stable profitability, healthy free cash flow best-ever quarter in managed services, Amdocs instantly boosts the market impact of the TTS Wireless acquisition. While Amdocs is hardly alone in emphasizing 5G, it stands out in acquiring a 5G services specialist. Key 5G rivals, such as NEC/Netcracker, Ericsson, Nokia, and Huawei will not necessarily need to react to the Amdocs move by acquiring 5G visualization software and engineering specialists, but will need to refresh their 5G services marketing messages to curtail Amdocs’ near-term portfolio and market presence gains. In particular, Ericsson and Nokia are TTS Wireless partners and will need to adjust their 5G managed services menus to account for the Amdocs takeover of TTS Wireless.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

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Ron Westfall

Senior Analyst, Research Director at Futurum Research
Ron is an experienced research expert and analyst, with over 20 years of experience in the digital and IT transformation markets. He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including software and services, infrastructure, 5G/IoT, AI/analytics, security, cloud computing, revenue management, and regulatory issues.
Ron Westfall