CSG Buys Lucent Assets for $300M

CSG Systems International Inc. has agreed to buy all of Lucent Technologies Inc.'s billing and customer-care assets for $300 million in cash.

The deal includes all of the software and services Lucent bought from Cambridge, Mass.-based Kenan Systems for $1.48 billion in 1999.

CSG executives said the reduced price paid by the company reflects its ability to "meet a number of requirements Lucent had in a timely fashion."

CSG will continue to supply Lucent with networking solutions after the deal is completed, the companies said.

Two hundred Lucent customers in 22 countries use its Arbor/BP billing and customer-care software. CSG said sales momentum in the division dropped dramatically because Lucent is a hardware-driven business and the former Kenan assets are software.

But CSG executives said Lucent never slacked off in its attention to research and development in the billing sector.

CSG chairman and CEO Neal Hansen called Lucent's products "a great fit" with CSG's core business. His company's strength lies in large-scale service bureaus with domestic telecommunications companies, he said.

Lucent provides off-the-shelf software solutions used primarily by wireless and wireline telephony and satellite providers. That technology will help CSG further penetrate the converged marketplace, as the Lucent software can support telephony deployment and record 230 million call details a day.

The deal will allow CSG to offer broader solutions to its current customers, including AT&T Broadband.

Hansen said CSG has been looking for an acquisition to serve as a catalyst for growth. The Lucent billing assets fit that bill, because they're not part of that company's core business and "we didn't have to pay six times revenue" to buy it, he said during a conference call.

Lucent's billing and customer care division employs 1,300 employees throughout the world. CSG executives would not speculate on the number of workers it will retain but during the call they expressed interest in two of the three top managers currently employed by Lucent.

Because of the acquisition, CSG has revised its revenue projections for 2002. Its previous reports predicted $480 to $510 million in revenues in the coming 12 months. Now, those figures have been revised and the company believes revenues will range from $660 to $690 million. Per-share projections will drop, to $1.90 to $2.05 from the previously projected $2 to $2.15 per share, a change reflective of one-time restructuring charges related to the deal.

The parties expect the deal to close by the end of first-quarter 2002.