Wireless software and services firm Teleca AB is selling off its network consulting services division, AuSystems, in two deals valued at a total of SEK 822m ($117m).
AuSystems’ operations in Sweden, Denmark, and Poland will be acquired by Swedish network services provider Cybercom Group AB for SEK 730m ($104m), while French IT services vendor Devoteam Group SA will pay SEK 92m ($13m) for the subsidiaries in Norway, the UK, France, and Italy. Teleca said it is looking into the possibility of winding down AuSystems’ remaining businesses in Spain and Portugal.
Teleca had been planning to float the AuSystems business as a separate company on the Stockholm stock exchange. However, financial advisers HDR Partners concluded that a sale would generate as much cash as an IPO. In a statement, Teleca said that it believed the disposal to be in the best interests of AuSystems’ customers and employees.
In total, the deals will result in a capital gain of SEK 378m ($54m) for Teleca, as well as bringing in SEK 814m ($116m) in cash including transaction costs but excluding cash from future tax benefits.
AuSystems was formed in 2006 following the merger of Teleca’s Operators and Network Equipment Providers divisions. The business has its roots in wireless software and consulting firm AU System AB, acquired by Teleca in 2001 for SEK 1.4bn ($200m), just a few months after Teleca itself had been spun out of Swedish software engineering and consulting firm Sigma AB.
Teleca has also announced that it will not be making further investments into the renewal of its Obigo software suite, which allows mobile phone users to perform functions such as browsing, messaging and phone management. The company said the move is aimed at eliminating the risk of continuing losses in its Obigo product business.
Teleca said that source code associated with Obigo would be opened up to customers in order to drive the change from a product to a services model. The company will provide maintenance and support services for the existing software from facilities in Russia and Korea, but will close its product development center in Sweden. More than 200 Teleca staff currently employed at the facility in Lund-Malmo will be offered a transfer to Sony Ericsson Mobile Communications.
Teleca will take a one-time charge of SEK 482m ($69m) related to the restructuring of Obigo, made up of a goodwill write-down of SEK 352m ($50m), a write-down of capitalized R&D costs of SEK 100m ($14m) and restructuring expenses of SEK 30m ($4m).