• NEC has long been rumoured to be keen on acquiring major BSS vendor CSG
• Now it has agreed a $2.9bn acquisition
• It will merge CSG with its existing OSS/BSS unit, Netcracker
• Appledore Research analyst cites portfolio overlap as an issue but also acknowledges the potential growth opportunities from a Netcracker/CSG combination 

After many months of speculation and expectation, NEC has finally pulled the trigger on its anticipated acquisition of BSS vendor CSG by agreeing to acquire the Denver, Colorado-based company for $80.70 per share in a deal valued at almost $2.9bn. 

The news, announced very early on Wednesday, sent CSG’s share price soaring by almost 15% to $78.89 on the Nasdaq exchange, though this is slightly below the offer price. 

In February this year, TelecomTV reported that NEC was believed to be circling CSG, which was reporting improving financials – see CSG ends 2024 on a high as M&A speculation swirls.

It continued growing during the first six months of this year: In August, CSG reported revenues for the first half of 2025 of $596.6m, up 1.9% year on year, and an operating profit of $59.2m, up 3.5%. 

And now the deal has been agreed by the respective boards, with the companies claiming it “strengthens NEC's position as a leader in next-generation digital solutions and accelerates AI and cloud-driven innovation for customers across industries. It will bring together complementary software and services across digital transformation, expanding NEC's software-as-a-service (SaaS) portfolio, customer footprint, and global reach.” 

They continued: “Adding CSG’s proven SaaS product portfolio and strong global customer base to NEC and its subsidiary, Netcracker, delivers meaningful value to customers through a diversified and expanded product portfolio. The transaction will enable NEC to deliver a more competitive offering in next-generation environments, such as global communication service providers, and to leading brands in high-growth sectors such as media, financial services, healthcare, retail and logistics. The transaction builds on the capabilities of NEC’s subsidiary, Netcracker, which provides a complementary global footprint and deep expertise in BSS (Business Support Systems) and OSS (Operational Support Systems), aligning naturally with CSG’s strengths.”

A combination of Netcracker, which telecom software analyst firm Appledore Research has identified as one of the top-three players in the digital enablement systems sector (traditionally called the BSS sector), and CSG, one of the top-10 companies in the sector, certainly delivers greater scale in a growing market and would create a greater rival to market leader Amdocs. 

According to Appledore (in this assessment of CSG), the digital enablement sector was worth $31.7bn in 2024 and is set to grow gradually to be worth $35.3bn by 2028. (That market value includes professional services and product sales, with a split of about 65% and 35% respectively). 

But it will also deliver portfolio overlap, as Appledore principal analyst John Abraham pointed out when commenting on the M&A speculation in February.   

And he hasn’t changed his mind, though he does recognise the rationale for the move.  

“NEC/Netcracker’s acquisition of CSG represents a strategic consolidation move, strengthening NEC's already robust position in the telco BSS market,” Abraham told TelecomTV in an email exchange. 

“At $2.89 billion, a 17% premium over the prior day's closing price, the deal values CSG at an enterprise multiple of 2.4x, moderately above typical BSS acquisition valuations, which usually come under 2x,” noted the analyst. 

He added: “CSG's extensive customer base alone presents significant value for NEC/Netcracker. While CSPs account for about 70% of revenues, CSG maintains a diverse portfolio of 900+ clients spanning various verticals across 120 countries. Within telecoms, CSG has a strong foothold in the North American cable market, with Comcast and Charter representing approximately 39% of total revenue – a strategically valuable position given these operators' continued growth ambitions.”

But there is the question mark over the product portfolio duplication. “CSG’s portfolio spans three main segments – customer experience, revenue management and monetisation, and payment services. From a portfolio perspective, there is considerable overlap with Netcracker, which offers a well-regarded end-to-end BSS/OSS stack serving CSPs of all tiers globally,” noted the Appledore analyst. 

But Abraham added: “That said, the acquisition creates opportunities to develop specialised solutions for telco and adjacent segments and expand into new market segments.”

And not only target new enterprise verticals but also take CSG’s expertise into additional geographic markets: Currently, more than 80% of CSG’s revenues are generated from customers in the Americas, while NEC/Netcracker generates most of its sales in the EMEA and Asia regions, as the chart above shows. 

The question for NEC, if it can successfully close the deal, is whether it can manage to not only make sense of the combined portfolio for customers but keep the Netcracker and CSG teams happy and ready to collaborate – that will be the much harder of the tasks, if previous M&A processes are anything to go by. 

And this isn’t the first BSS sector M&A announcement of this Autumn/Fall: Albeit on a much smaller scale, Canadian BSS vendor Optiva was saved from collapse by Finnish BSS firm Qvantel, which is acquiring its peer for a combination of cash and stock to gain greater scale – see Qvantel saves BSS peer Optiva with cut-price acquisition.

- Ray Le Maistre, Editorial Director, TelecomTV