Amdocs: A safe pair of hands in a confined territory

I recently attended the Amdocs annual analyst relations event in Tel Aviv. Amdocs intends to live up to its paradigm “embrace challenge, experience success” by anticipating challenges and offering solutions to its client base. Some of these initiatives include:

  • Amdocs achieved progress on its mission to enable communication service providers moving up the chain. Amdocs is probably the most outspoken vendor in its loyalty to carriers. This is a strong pitch to retain the trusted advisor status in the domains of customer care and billing services — i.e., domains which operators regard as their core competence. Such trust is vital for the ambition to go deeper into joined go-to-market and transaction-based revenue share models. But the journey towards using business-outcome-based SLAs to reflect the rising influence of business leaders has just begun. 
  • Amdocs is committing to improve customer experience. The vendor invests in its operations and solution capabilities to keep the portfolio aligned with the evolving needs of the carriers. Upgrades include the regional state of the art operations center for European carriers in Galilee and progress on packaging its tools as full B2B2C solutions. Additional enhancements come with the $120 million acquisition of Actix, allowing service providers to use geo location-based services.
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It's Harvest Time For Vodafone In The US

Alas: It has finally happened. Vodafone has sold its 45% stake in Verizon Wireless to Verizon for $130 billion in a part cash ($58.9 billion) and part equity deal. The deal values the 45% stake at 9.4 times EBITDA. Markets had been speculating about this deal for years, so why has it taken place now? Arguably, the decision was made easier by Verizon’s share price, which is at a decade high, as well the the potential for rising interest rates. From Vodafone’s perspective, our main observations are that:

  • The deal is strategic for Vodafone and financial for Verizon. While the deal is a strategic transaction for Vodafone – it has decided to exit the US market – it is a financial transaction for Verizon: It already controlled Verizon Wireless through its 55% stake in the business. But after Vodafone’s exit, Verizon can keep the cash and no longer needs to pay out a dividend to Vodafone. It can instead use this retained dividend cash flow for capital expenditures and other investments to help boost its position in an increasingly competitive US wireless market (e.g., Softbank + Sprint; T-Mobile + MetroPCS).
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