Ericsson buys Telcordia for $1.15B

Ericsson (s ERIC), the Swedish networking equipment maker, is buying Piscataway, N.J.-based telecom software provider Telcordia for $1.15 billion, the company announced Tuesday morning.

Telcordia, which can trace its roots back to the old AT&T (s t), had revenues of $739 million during the last fiscal year ending Jan. 31, 2011.

In 1983, after the break up of AT&T, seven regional Bells and Ma Bell were created. The companies together created a research lab, which helped pioneer technologies such as caller ID, call waiting, mobile number portability and toll-free telephone numbers. However, as the Baby Bells decided to cut back on R&D, Bellcore was sold to SAIC in 1995 — then a $650 million a year business along with $350 million a year in professional services. SAIC, in turn, sold the company to private equity groups for $1.35 billion in 2004.  Telcordia was put on sale by its private equity backers, Providence Equity Partners and Warburg Pincus, earlier this year.

Ericsson, like many of its counterparts, has been trying to fight off competition from Chinese telecom makers such as ZTE and Huawei, by moving into software and services. Telcordia gives the company expertise in operations support systems/business support systems.

Hans Vestberg, President and CEO, Ericsson, says: “The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced. In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi vendor product portfolio.”

“We have global presence and scale, global services capabilities and superior knowledge about networks and network performance, as well as an already established position in the OSS/BSS space. It is a perfect fit,” he adds.