• Amdocs is acquiring billing and charging vendor Matrixx Software for about $200m
• The deal adds yet another charging platform to the Amdocs portfolio
• It is just the latest in a series of BSS M&A deals 

Deal by deal, the global business support system (BSS) sector is getting smaller, with mergers and acquisitions reducing the number of options that digital service providers have when they need to source systems for their billing, charging, rating, revenue and order management processes. The latest example of BSS industry consolidation is the acquisition of Matrixx Software by one of the giants of the sector, Amdocs.

The deal, first reported by Light Reading, comes in the wake of Qvantel’s recently completed acquisition of Optiva and the announcement of the much bigger acquisition of CSG by NEC (the parent company of major BSS player Netcracker) – NEC splashes $2.9bn on BSS giant CSG.

Amdocs has not issued an official press release announcing the deal, though its media relations team has promised to share a statement (yet to materialise). 

But based on documents seen by Light Reading, the deal values Matrixx Software, which was founded in 2009 and is based in Foster City in California, at about $200m. That figure isn’t much more than double its annual revenues, which multiple analyst firms peg at about $90m (though some, including Analysys Mason, put Matrixx’s annual sales at closer to the $70m mark). 

The Matrixx pitch from the start was that it was developing BSS tools in a different way, as it built a powerful, real-time transaction processing platform and then developed multiple applications (charging, rating, policy control) to run atop that platform, though it is the charging application that has proven most popular with customers. 

The company boasts an impressive telco customer roster, which includes names such as AT&T, Orange, Swisscom, Telefónica, Telenor, Telus, Telstra, Verizon and Virgin Media O2 (VMO2), though as James Crawshaw, practice leader of service provider transformation at analyst firm Omdia, points out in his LinkedIn blog about the deal, most operators have multiple charging systems sourced from different vendors. 

Since its inception, Matrixx had raised about $150m in funding, with the latest cash injection of $50m, from Francisco Partners, announced in 2021. 

But it seems the company was struggling to make ends meet and was hampered by debt that it was unable to refinance, so put itself up for sale and, according to John Abraham, who leads the digital enablement practice at Appledore Research, the $200m price tag “is understood to be below initial expectations. Matrixx had reportedly held out for higher valuations, but was likely pressured by investors amid rising interest rates that have compressed tech sector valuations over the past year”, noted the analyst in commentary shared with TelecomTV. (Abraham will publish an in-depth analysis of the deal on the Appledore website in the coming days.) 

The analyst added that Matrixx Software’s “primary offering is its telco charging engine” and that its architectural approach enabled it to claim “superior charging performance versus traditional vendors through proprietary in-memory database technology, which helped attract customers and investors in the 2010s – including Tier 1 operators Telstra and Swisscom, who also took equity stakes.” 

However, “Matrixx lost traction in the late 2010s as CSPs, burned by integration costs and complexity, abandoned best-of-breed approaches in favour of full-stack offerings, particularly for mid- and lower-tier opportunities. While Matrixx partnered with adjacent product vendors and professional service providers to address full stack opportunities, these partnerships yielded limited benefits for the company.”

And when the company put itself up for sale, “Amdocs was seen as a highly unlikely buyer for Matrixx, given it already had multiple charging engines from its 2020 Openet acquisition and ranks as the largest charging vendor by revenue per Appledore’s Digital Enablement marketshare report. The deal appears driven by customer acquisition – Matrixx is believed to have over 30 telco customers, although most deployments were not for core charging functions,” noted Abraham. 

Omdia’s Crawshaw points out, too, that the deal will boost Amdocs’s existing leadership position in the charging platform sector and could also give it some capabilities for the mobile virtual network operator (MVNO) market that it might not already have. 

Analysys Mason’s Justin van der Lande states in his LinkedIn post about the deal that there is also a hint of a defensive strategy behind the agreement, as it takes Matrixx off the table at a time when other major BSS players are scaling up with acquisitions while cementing its leadership position and giving Amdocs some accounts upon which it can build. 

- Ray Le Maistre, Editorial Director, TelecomTV