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Amdocs Rides on Partnerships, Extends Contract With PLDT

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Amdocs (DOX - Free Report) continues to expand its global client base by signing long-term contracts and collaborating with major telecom industry players worldwide.

The recently announced expanded partnership with leading telecom and digital service provider, PLDT (PHI - Free Report) , under a new six-year agreement, is a step toward that direction.

Amdocs has an ongoing collaboration under a seven-year Master Transformation Agreement with PLDT and Smart on IT application modernization and new digital technologies.

Per the new agreement, Amdocs will integrate, modernize and handle PLDT and Smart’s IT Infrastructure, including introduction of artificial intelligence, machine learning, analytics and robotics to the partnering companies’ operations.

Advanced automation will enable PLDT and Smart to incorporate predictive and zero touch operations, auto resolutions of errors and self-healing of systems, thus expediting their transition to the cloud, reducing operating costs and resulting in enhanced customer engagement.

Partnerships & Acquisitions Boost Growth

In fiscal 2017, Amdocs reported record 12 months backlog of $3.25 billion, which includes key transformations project with global service providers such as Comcast (CMCSA - Free Report) , T-Mobile, Altice and DISH in North America; Vodafone British Telecom, Orange in Europe; América Móvil, Airtel, Telefónica, Telstra, SingTel and Globe in the rest of the world.

During third-quarter fiscal 2018, it rolled out automated operation capabilities for Vodafone India. The company also partnered with Telstra in Australia over next generation OSS platform for its B2B line of business. Such deals are expected to boost the company’s top line.

The company is also benefiting from well-timed acquisitions. In the last reported quarter, Amdocs integrated its recent acquisitions of Vubiquity and UXP Systems.

It is also encouraging to see that the communications giant Verizon has selected Vubiquity's services and technology to handle the processing and packaging of its vast video on-demand and pay-TV pay-per-view portfolio. These acquisitions are expected to aid Amdocs’ long-term growth.

Customer Concentration Remains a Drag

Despite these positives, Amdocs is experiencing high customer concentration. Approximately 73% of Amdocs’ total revenues in fiscal 2017 came from the top 10 clients. Loss of any of these customers will result in significant erosion of the top line.

AT&T (T - Free Report) , the company’s largest client, accounts for a sizable chunk of revenues. Management anticipates revenues from AT&T to decline in a double-digit rate in fiscal 2018, hurting the company’s overall top line.

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