Amdocs Up with Managed Services

Amdocs Ltd. (DOX - Analyst Report), the global leader in customer experience system and billing software for communications service providers, continues to benefit from the telecom carrier industry’s long-term trend towards network consolidation and convergence. Amdocs is currently generating more than 70% of its revenue from managed services and other recurring sources.

Communication service providers implement billing and customer care systems to enable quick responses to customer requests, ensure proper billing for services, validate network users and optimize sales and marketing operations.

The Telecommunications Software Management System (TSMS) market is highly competitive. More than 100 vendors provide customer management and billing system solutions throughout the world. In addition to Amdocs, other major players include Convergys (CVG - Analyst Report), CSG System (CSGS - Snapshot Report), Oracle (ORCL - Snapshot Report), and Comverse (CMVT - Snapshot Report).

Despite competition, Amdocs has the largest customer base and broadest product line in the industry. The company’s Customer Experience Systems portfolio (CES 7.5) provides a single platform capable of supporting complex requirements of traditional and next-generation triple-play voice, video and data services as it focuses on addressing emerging market trends in the communications industry. This solution facilitates carriers to effectively monetize their assets, deliver superior services and gain improved operating performance.

Recently, the two major European telecom carriers, Elisa Corp. of Finland and T-Mobile UK entered into six-year and four-year managed services contracts with Amdocs, respectively. The company already has a seven year managed services contract with AT&T (T - Analyst Report) and another five year contract with Sprint-Nextel (S - Analyst Report).

Other major customers of the company’s managed service include Clearwire, Rogers Telecom, Metro PCs, and J:COM. In our view, implementation of integrated customer management systems is essential to prevent customer churn at carriers. We thus remain bullish on the TSMS segment and maintain our Buy recommendation for Amdocs.