Why Amdocs is betting on M&As
Business and operations support solutions provider Amdocs is adapting its Latin America portfolio to developments regarding open RAN, 5G monetization, network orchestration, and cloud services.
As part of this strategy, it acquired Openet and technology consultancy Sourced Group. Amdocs is not ruling out more acquisitions that add value to its 5G proposition.
In Latin America, Amdocs has contracts with América Móvil and Telefónica, among others. It is also assisting with an open RAN implementation, as it has more than 40 active sites.
Amdocs Latin America division president Clayton Cruz told BNamericas in this interview that high growth was achieved in the region last year and that a similar expansion is planned for this year.
Cruz also talked about Amdocs' regional strategy, 5G, and more.
BNamericas: How are you supporting operators’ digital transformation in light of the 5G rollouts in the region?
Cruz: We have a lot of work in Latin America and a couple months ago things started to speed up. We have conversations with América Móvil, Telefónica, with almost all the operators.
We are working very closely with them because the questions they have are: How do I monetize 5G? What is the benefit for the end customer? And how do I use it to enter other industries?
I believe that 5G access – the deployment of towers and antennas – has already been resolved. But what is going to add value for the end customer and operators is monetization and experience.
I cannot tell you the details, but we are involved with many operators and we are in talks in Brazil, which is among the most advanced countries regarding autonomous 5G networks. We also work with [companies in] Chile, the Dominican Republic, Peru, and Colombia.
BNamericas: The 5G business case for Latin America doesn't seem very clear yet. How will investments be monetized?
Cruz: For 5G to be successful, it is very important to get a connection between the business and the network and that is where we participate.
Today, a "killer application" for 5G is being sought and I think there is none. Everything will depend on the [individual] country, the strategy and how they enter the business world.
Operators are telling me they have to move from being a tube provider to offer end-to-end services and solutions. That's where I think 5G can add a lot of value as a development platform.
Now, when we started with 4G, we didn't know what the killer application would be either, and many applications and services for end customers were developed on top of that network. So, the issue now is to know how the operator is going to move towards becoming a provider of end-to-end solutions for business and how it will continue delivering experiences for end customers.
BNamericas: How have you prepared your portfolio for this transformation?
Cruz: In the last four or five years, we have begun a transformation of our portfolio because today a cloud portfolio based on microservices is needed. For this, we had to invest in open interfaces.
We also started looking at billing-as-a-service solutions because many providers want a different business model. They don't want to invest in a giant solution from day one, but test use cases or business models and grow from there.
Another thing we did, and we talked about it a lot this year during the Mobile World Congress, is the development of interfaces and digital channels for a 360° user experience.
Our solutions are also low code, that is anyone, without much experience in programming but with some business knowledge, can start putting together processes.
And, well, the other investment is in cloud issues, so that the entire portfolio is cloud-ready.
A year ago we bought a company called Openet, because Amdocs has a lot of experience in business support software (BSS) and operation (OSS), but Openet completes our portfolio and helps us work on interconnection with networks and network management.
In my opinion, one of the most important challenges of 5G is going to be the orchestration of the network to guarantee quality of service, latency and bandwidth. That is why Amdocs invested a lot in that part and we continue to invest and expand the portfolio.
BNamericas: Amdocs also acquired technology consultancy Sourced Group. Do you plan to continue with M&As?
Cruz: I believe M&As are never done because there is an evolution of competition models and needs.
If you look at the history of Amdocs, we have always invested in our own developments, but when there is a good opportunity to add value to our portfolio, acquisitions are made.
We are always looking to see where to continue growing.
BNamericas: And where are you looking for those opportunities right now?
Cruz: Everything that adds value to 5G and the cloud.
BNamericas: Are you interested in developing the 5G technological ecosystem?
Cruz: I think there is a lot of opportunity and we don't know how many opportunities we will see. With 4G, we didn't even imagine what was going to happen with WhatsApp or Facebook.
Today we don't know what will happen to the opportunities in banking, industry 4.0, agriculture.
I think there will be many opportunities and small start-ups that are going to come up with their solutions. The open environment of 5G helps a lot people entering from the outside and add value with their ideas.
BNamericas: What is Amdocs doing with open RAN?
Cruz: Amdocs deploys networks in Latin America. We work with an open RAN provider that has its hardware and software, and Amdocs brings its design, optimization and integration solution. We have more than 40 sites working for rural internet here in Latin America.
We can do this because a couple of years ago we invested in the purchase of a company that had the right people to do this. Amdocs is going to take the role of integrator in open RAN and I think in that sense we add a lot of value.
Today open RAN is still proof of concept, but it will accelerate in the next three years.
BNamericas: But the first 5G deployments still rely on traditional equipment.
Cruz: It all has to do with the spectrum that is going to be used. When 5G rolls out on millimeter bands, you're going to need more sites for a seamless experience. So open RAN in the future may fill that need.
Today, too, operators are starting with open RAN in rural areas.
BNamericas: Is Amdocs interested in participating in the private network market?
Cruz: Well, to be successful in private networks you have to know about the cloud, about 5G and well, that's what we do, right?
In February we made an announcement with Samsung regarding private networks, where they come with their hardware and software technology and we come with our knowledge of design, development, deployment, optimization and maintenance. In fact, we have already made a private network at a university in the US.
There is a lot to explore and especially in the industrial sector. I see it in Latin America as something in the medium, long term.
BNamericas: And which role will operators play in the private network value chain?
Cruz: This remains to be seen and I would love to have the answer, but I can tell you that is something the operators are already thinking about.
Right now, the model in Latin America is that they own the spectrum.
BNamericas: How is Latin America doing in terms of professionals and skills?
Cruz: We at Amdocs see that there are many people who want to learn new technologies and that is why we have a very strong people development plan.
It's very different from someone who was writing code for a closed platform than someone who has to do it for an open platform and low code. You also need to develop some business skills. This also applies to those who were developing on-premise and now have to do it for the cloud.
In Latin America, we have a knowledge center in São Carlos (Brazil) with around 400 people. We also have 100 people in São Paulo and in Guadalajara (Mexico) 400-500 people.
We are investing heavily in these knowledge centers to continue growing and supporting communications providers in Latin America.
BNamerica: Do you plan to hire?
Cruz: Actually, it depends on the projects. Last year we in Latin America had to hire double the staff due to the projects we had.
And when we don't have the people or don't have the time, the option is always to buy companies that have very strong human capital, as we did with Sourced Group.
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