In the space of the last decade, billing and managed services provider CSG International has made a series of strategic acquisitions that has helped align its portfolio ever closer to the demands of the wholesale telecoms market.
This year, the company continued to distance itself from the competition with the $19 million purchase of Ascade, a Swedish company specialising in advanced, intelligent inter-carrier trading and routing.
“By adding the Ascade product set to our portfolio, we have further enhanced and strengthened our leadership in the wholesale space, giving us an additional set of powerful capabilities that we look forward to offering to our large customer base,” explains Hassan Iftikhar, vice president of product management, wholesale business management for CSG. “This acquisition puts us squarely at the front of the wholesale solutions market.”
Identifying the carrier market need
CSG was started in 1982 as a billing solution provider for the cable industry, serving the likes of Comcast and Time Warner Cable. As time went on, the company enhanced its capability through the strategic acquisitions of Telution, Quaero and Prairie Voice Services.
In late 2010, CSG acquired UK-based BSS vendor Intec Telecom for $372 million. Intec was a provider of interconnect settlement, mediation and retail billing systems. This acquisition was said to have significantly enhanced the company’s BSS portfolio and gave its business global reach at over 400 carriers.
Several months after the acquisition, CSG was renamed CSG International to reflect its new scale. Today, the company serves some of the world’s largest carriers, including AT&T, Comcast, DISH Network, France Telecom-Orange and Vodafone.
The company feels that the size and diversity of this customer base gives it a unique view of the challenges and drivers within the wholesale market.
Under pressure from the ongoing financial crisis and reducing termination rates, and facing competition from OTT players such as Skype, many of CSG’s clients are struggling to find ways to reduce costs and increase operating margins.
“From our perspective the growth of OTT players and regulatory pressures on termination rates meant that carriers had to look at two things,” says Iftikhar. “One is how do they grow those international revenues, and secondly, and mostly importantly for us, carriers have to look at what they can do on the systems side to streamline their internal business processes and make them smarter.”
By July 2012, CSG had completed its acquisition of Ascade, which was established in Stockholm 15 years ago as a wholesale consulting business. The company launched its first solution in 2002, focussed on optimising voice traffic flow between operators in Europe. It then established itself in the global marketplace by developing solutions for quality monitoring and quality-based routing –
allowing carriers to base routing decisions on more than purely commercial criteria.
CSG says that it was Ascade’s domain expertise in optimised routing and wholesale billing that caught its eye. Ascade had grown a customer base of over 70 carriers located in Europe, the Middle East and Asia. The two companies combined provided an opportunity for CSG to cross-sell its BSS and managed service solutions to Ascade’s customers, and to take Ascade’s advanced routing and quality assurance products to its own 250+ customer base.
“Obviously when you buy a company it’s not just about products, it’s about people, financials and so forth. Ascade had a very healthy revenue stream, they were generating cash and had a good strong installed base of customers that were complementary to our own,” explains Iftikhar.
Promoting its new portfolio
With the Ascade acquisition under its belt, CSG is now looking to extend its range of wholesale solutions to new customers and expects to also find a lot of interest among its existing customer base.
CSG has estimated that its wholesale automated routing solutions can lead to average cost savings of between 3 and 4%, which it says is a highly compelling proposition, particularly as this figure can be significantly higher depending on the level of automation currently employed.
Quality of service (QoS) is also taking on a greater level of importance with carriers, according to Johan Harryson, director of wholesale EMEA at CSG, formerly the general manager of EMEA & Americas at Ascade. “We know that cost is an important factor but these operators are also trading with each other, meaning that if they can terminate traffic with demonstrably good QoS, there is the potential for them to grow their revenue by very high percentages,” Harryson explains.
AscadeAssure lets carriers assess the QoS and the potential for fraud and other revenue loss associated with a wide variety of potential routes. The software, and Ascade’s ability to interact with virtually every common switch type on the market, means that preferred physical routes for different call types can vary minute by minute according to decisions made by its optimal routing engine.
An example of this is Ascade’s calling line identification (CLI) service, which checks whether subscribers receiving international calls are able to identify who is calling. This can prove important, claims the company, as a subscriber that cannot tell who is calling them is less likely to answer (particularly when abroad), resulting in a loss of revenue for both carriers involved. Another example is Ascade’s ability to detect ‘bypass fraud’ through its SIM Box detection services, ensuring that calls are terminated over high quality, licensed – and chargeable - routes.
CSG says AscadeAssure is the leading test call platform on the market, used by MNOs, carriers, SMS aggregators and other service providers to proactively secure end-to-end QoS as well as to detect fraud in their international networks. It says the platform allows customers to increase traffic volumes, revenues and margins as it helps to ensure a higher number of successful calls/SMS are passed through the customer’s network.
CSG believes its global footprint will be vital in bringing Ascade’s solutions to new markets. Ascade had a limited presence in North America, but this is expected to change owing to CSG’s strength in the market. Equally, CSG hopes to leverage its strong position in Latin America, where Ascade has no previous presence. CSG has extensive customer references in the region, including Telefónica, Vivo and Nextel, and its strong sales and delivery team will provide a springboard for the Ascade portfolio.
Supporting the entire wholesale value chain
Moving forward, CSG is focussed on helping carriers maximise top line revenue and monetise their offering. “We’re constantly trying to look at demand from both the consumer market and the carrier segment, and then develop product sets that can help carriers address that demand,” says Iftikhar.
Another of CSG’s objectives is to help carriers position themselves more strongly in emerging service value chains, providing services to both buyers and sellers in new service ecosystems. “CSG’s goal is really to provide the systems and the services to make that transition,” explains Iftikhar.
The company’s faith in the revenue management space appears well founded. It is estimated that the global revenue management market will grow from $6.5 billion in 2011 to $7.5 billion in 2016 with business optimisation likely to be a key driver, according to Analysys Mason.
As carriers increasingly look to automated, intelligent systems to achieve cost and operational efficiencies as well as improve the quality of experience delivered to customers, CSG says it is focussed on offering solutions across the entire wholesale value chain.
Key Facts: CSG International
History: Originally known as CSG Systems, the company began life as a billing provider in the US for cable companies. Through a series of acquisitions over the years CSG has enhanced its portfolio, including Telution in 2006, Prairie Voice Services and Quaero in 2009. With the acquisition of Intec in 2010, the company rebranded to become CSG International. Ascade is the company’s latest acquisition, which completed in July 2012.
CEO and president: Peter Kalan is CEO and president of CSG International. He first joined the company in January 1997 and held several management roles before his appointment including CFO, EVP and EVP of business and corporate development.
Revenue: CSG had total revenues of $734.7 million for FY2011.
Customers: CSG’s client list includes more than 500 customers worldwide in the cable, wireline, wireless, utilities, financial services, media/entertainment, logistics/transportation and government sectors.
Global locations: CSG has offices across North America, Asia-Pacific, Central America/Latin America and EMEA.
Products and services: CSG’s products include revenue management, content management and monetisation, customer interaction management, and analytics and intelligence. CSG’s services include business services consulting, business solutions implementation, core product support, business solutions optimisation, technology operations, and product management and development.
