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Ericsson Completes Technicolor Deal
by Zacks Equity ResearchJuly 05, 2012 | Comments : 0 Recommended this article: (0)
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LM Ericsson Telephone Company (ERIC - Analyst Report) completed the acquisition of French company Technicolor’s Broadcast Services Division for €19 million. Ericsson intends to expand its broadcasting area by increasing its current broadcast operations in terms of channels managed and households reached.
The acquired Broadcast Services business will bring with it about 900 highly experienced professionals along with playout operations located in France, the U.K. and the Netherlands. Ericsson is already the leading provider of managed services for telecom operators and has invested in processes and tools in this segment.
Currently, the TV industry is undergoing fundamental changes with the transition to multi-platform, on-demand television. Therefore, teaming up with a trusted partner enables broadcasters to meet up with the increasing commercial and technological complexity and competition in the TV broadcasting market.
Ericsson applies the managed services business model to improve efficiency, introduce innovation and increase revenues for broadcasters. Its managed services comprise solutions for network design and planning, network operations (the day to day operations of customer networks), field operations and site maintenance, network sharing solutions, as well as shared solutions like hosting of platforms and applications.
The acquisition of Technicolor’s Broadcast Services Division is a strategic move by Ericsson to become a leading provider in managed services for broadcasters.
In the recently reported quarter, Managed services revenue increased 16% year over year to SEK 5.7 billion ($0.8 billion) but declined 6% sequentially, the year-over-year increase was primarily driven by 23 new contracts accrued by the company during the fourth quarter of fiscal 2012.
Ericsson currently holds a Zacks Rank #3 which implies a short-term Hold rating on the stock.
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