Telavie, which is owned by private equity company Altor, will pay an undisclosed sum to acquire a 70% stake in FNS, which installs and maintains data and telecoms networks for fixed and mobile operators.
The companies will have a combined workforce of 10,000 employees and annual revenue of $1bn, with TNS making sales of $230m in 2004 and FNS reporting $770m. The deal still needs the approval of FNS’s Swedish unions, as well as government M&A watchdogs.
The merged company will compete against the network services operations of telecoms equipment manufacturers such as Ericsson, Nokia, Lucent Technologies, Huawei and Alcatel, which in recent months have won some major deals with operators, and made moves to build up their services capabilities.
In January, Ericsson won a five-year deal with mobile operator 3 worth $1.98bn to manage the operator’s multi-vendor network in Italy, including the service layer network and billing systems. Sprint awarded contracts to Lucent and Nortel last December worth $1.5bn and $1bn respectively to deploy and support its wireless, voice, and data networks.
Last month, Nortel spent $448m on acquiring US government IT services contractor PEC Solutions. In September 2004, Ericsson acquired French network services company Audilog for an undisclosed sum, and Nokia revamped its services business in February when it drew together disparate network services operations into a single operating division.
A growing number of telecom operators are outsourcing the integration and operation of their network infrastructure to third-party companies, in order to focus on their customer-facing sales and marketing activities.
Bosco Novak, senior VP of services at Nokia told ComputerWire earlier this year that the global market for mobile operator-related professional services is worth about $35bn annually, $23bn of which is telecoms-related. Novak said many mobile operators remain either unconcerned or unaware of the cost savings to be had by outsourcing aspects of their network function.
Telavie claims to be the largest independent installation contractor of telecoms infrastructure in Scandinavia. The company was formerly an in-house division of Norwegian telco Telenor, and was more recently known as Bravida Telecom prior to its acquisition by Altor in December 2004.
Telavie made a profit before interest, tax, and amortization of NOK 154m ($24m) in 2004. Its clients include Nordic operators Telenor, TeliaSonera, and Tele2.
Flextronics, which is based in Singapore, but operates from San Jose, California, also announced that its CEO Michael Marks is to step down early next year to be replaced by COO Michael McNamara.
