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Acquisition of Sigma Systems

News Acquisition of Sigma Systems
Hansen News
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Hansen News

01 May 2019

Hansen Technologies Limited (ASX: HSN), is pleased to announce the signing of definitive agreements for the acquisition of Sigma Systems (“Sigma”). The acquisition is expected to close on 31 May 2019.

Key Points:

  • Founded in 1996, Sigma is a leading global provider of catalog-driven software products for telecommunications, media, and high-tech companies. Its software is designed to streamline complex product and service offerings and provide a faster path to creating, selling and delivering new digital products and services, combined and packaged with traditional core services.
  • It is being acquired for an enterprise value (EV) of CAD157.0m (AUD166.2m1) – which equates to an EV/EBITDA acquisition multiple of 8.3 times calendar year 2018 (CY182) normalised EBITDA3
  • Funding for the acquisition will be 100% provided by a new bank debt facility of AUD225m underwritten by RBC Capital Markets.
  • Sigma has been majority owned by private equity investor Birch Hill Equity Partners Management since 2015.
  • CY18 revenue was CAD73.1m (AUD75.5m4) and CY18 normalised EBITDA3was CAD18.8m (AUD19.4m4).
  • CY18 revenue split was Americas 56%, EMEA 29% and APAC 15%.
  • Sigma has more than 70 customers with deployments in some 40 countries. Tier 1 customers include Liberty Global, Telstra, Vodafone, Inmarsat, Telkomsel, Altice, and Cox Communications.
  • Sigma has more than 480 staff with major offices located in Toronto, Canada (Head Office), London and Wales (UK) and Pune, India.
  • The strong strategic rationale for the acquisition includes:
    • The business is a high-quality asset – being a global leader in providing enterprise catalog-driven software products to the communications, media and high-tech sectors
    • It significantly expands Hansen’s scale and scope in the telecommunications sector – revenue from the telecommunications sector would have been 38% of total revenue in CY18 on a pro-forma basis if Sigma was owned during that period, compared to actual of 17%
    • Cross-sell opportunities exist into Hansen’s large utilities customer base by integrating the Catalog product into our energy product offerings, as well as PayTV.
  • The acquisition is expected to be earnings per share (EPS) accretive in FY202, excluding amortisation of acquired intangibles5.

 

Sigma Overview

Products

The Sigma product portfolio comprises catalog-driven software solutions that streamlines complex product and service offerings for communications, media, and high-tech companies.

The product portfolio includes:

  • Catalog – which provides a single source of “knowledge” for all of the service provider’s products and services, enabling the introduction and management of new and existing products and services with a single point of control, thus reducing the time-to-market for new offerings.
  • Configure Price Quote (CPQ) – Catalog-driven, this product applies real-time, enterprise-wide pricing structures to quote and capture orders, from standardised consumer offerings to complex tailored enterprise services.
  • Order Management – provides end-to-end management of an order, from when it is placed to when it is fulfilled and operational.
  • Portfolio Inventory – provides a single source of “knowledge” on all the products customers have ordered, the services that were activated for those products, and the resources that were provisioned for those services.
  • Provisioning – a network service and device activation product that manages, tracks and activates a complete range of network communication services and devices from a set of preconfigured activation solutions.
  • Insights – an analytics tool that provides service providers with real-time visibility of operational and sales performance at a granular level, allowing them to adjust sales strategies as necessary.

Sigma’s products enable business growth from new digital services combined and packaged with traditional core services. The product suite is highly complementary in nature and drives cross-sell expansion after initial deployment of one product. Product deployment can be either cloud or on-premise.

Sigma’s go-to-market strategy comprises a global direct sales force, combined with partnering with several systems integrators and CRM providers such as PwC, Infosys, Tech Mahindra, Microsoft and Salesforce to expand reach.

 

Customer Base

Sigma has a diversified revenue base with over 70 customers globally with deployments in approximately 40 countries. The average customer age is more than 8 years and includes many Tier 1 operators across the globe.

Customers include: Vodafone, Liberty Global, Telstra (Australia), Altice, Cox Communications (USA), Ziggo (Netherlands), Telkomsel (Indonesia), J:Com (Japan), Inmarsat (UK), Telmex (Mexico), Tiscali (Italy), Telus (Canada), Sky (UK), EWE TEL (Germany) and ViaSat (USA).

 

Financial Profile

Revenue in calendar year 2018 (CY18) was CAD73.1m (AUD75.5m4) and CY18 normalised EBITDA3 was CAD18.8m (AUD19.4m4), equating to a normalised EBITDA margin of 25.7%

Sigma has high levels of recurring revenue – derived from maintenance & support fees, periodic licence fees and managed professional services, while non-recurring revenue is derived from professional services and one-off licence fees.

CY18 revenue split was Americas 56%, EMEA 29% and APAC 15%.

 

Strategic Rationale

There is strong strategic rationale for the acquisition:

  • The business is a high-quality asset – being a global leader in providing enterprise catalog-driven software products to the communications, media and high-tech sectors
  • Sigma’s proprietary products sit within or adjacent to our core business of billing and customer management, and are well designed to capture growth opportunities from the rollout of new telecommunications services such as 5G
  • It significantly expands Hansen’s scale and scope in the telecommunications sector – revenue from the telecommunications sector would have been 38% of total revenue in CY18 on a pro-forma basis if Sigma was owned during that period, compared to actual of 17%
  • Cross-sell opportunities exist into Hansen’s large utilities customer base by integrating the Catalog product into our energy product offerings, as well as PayTV
  • Sigma further expands the depth and breadth of our global presence
  • It is expected to be earnings per share accretive in FY20, excluding amortisation of acquired intangibles5.

 

Conference Call

An investor briefing to discuss the acquisition was held on 2 May 2019 at 11:30 am (Melbourne time).

 

For further information:

Investor and analyst enquiries

Rick Sharp
+61 3 9840 3076 / +61 414 571 060
rick.sharp@hansencx.com

 

About Hansen

Hansen Technologies (ASX: HSN) is a leading global provider of customer information systems, billing software and data management systems to four industry verticals: energy, water, telecommunications and pay TV. For over 40 years Hansen has worked alongside clients enabling them to continuously optimise their critical billing. Every day 1000 Hansen experts globally are focused on 500+ clients; helping to streamline billing and operational processes, manage and analyse consumption data and ultimately improve their customers’ experience.

 

Important Notice

Information contained in this release:

  • is intended to be general background information only, and is not intended that it be relied upon as advice to investors or potential investors and is not an offer or invitation for subscription, purchase, or recommendation of securities in Hansen;
  • should be read in conjunction with Hansen’s financial reports and other market releases on ASX;
  • includes forward-looking statements about Hansen and the environment in which Hansen operates, which are subject to significant uncertainties and contingencies, many of which are outside the control of Hansen – as such undue reliance should not be placed on any forward-looking statements as actual results or performance may differ materially from these statements;
  • includes statements relating to past performance, which should not be regarded as a reliable guide to future performance; and
  • includes certain financial information not recognised under IFRS which Hansen considers useful to assist in evaluating Hansen’s performance – however, such information has not been subject to audit or review in accordance with Australian Auditing Standards.

All dollar values are in Australian dollars (AUD) unless otherwise stated.

 

Notes

  1. Based on a AUD/CAD (Canadian Dollar) exchange rate of 0.9444
  2. All references to “CY18” refer to the 12-month period ending 31 December 2018. References to “FY20” refer to the forecast financial year ending 30 June 2020
  3. Normalised EBITDA is a non-IFRS measure. Normalised EBITDA represents EBITDA that has been adjusted to capitalise research and development (R&D) spending. The normalisation adjustment for R&D spending capitalised is an estimate, and represents 4% of CY18 revenue
  4. Based on an average AUD/CAD exchange rate of 0.9684 for CY18
  5. Earnings per share excluding amortisation of acquired intangibles is a non-IFRS measure.

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1. What does “modernise with precision” mean for Tier-1 telecom operators?

“Modernise with precision” describes a low-risk, targeted approach to BSS/OSS modernisation where operators upgrade only the parts of their digital stack that create the greatest impact. Instead of embarking on high-risk, multi-year full-stack replacements, Tier-1 telcos selectively introduce cloud-native BSS/OSS, API-driven telecom architecture, AI-ready data layers, and TMF-compliant BSS components.
This modular strategy reduces cost and disruption, allowing operators to strengthen areas such as product agility, order orchestration, customer experience, and operational efficiency while maintaining stability in core environments. It aligns directly with TM Forum’s Open Digital Architecture (ODA), which encourages a composable, interoperable, future-proof approach to telco transformation.

2. Why is time-to-market so important for telecom monetisation today?

Telecom monetisation increasingly depends on the ability to respond quickly to new commercial opportunities – from enterprise IoT solutions and digital services to 5G monetisation, wholesale partnerships, and B2B vertical offerings. In this environment, operators that can design, package, and activate new services in days rather than months gain a clear revenue advantage.
Legacy catalogues, rigid product hierarchies, and tightly coupled BSS architectures make rapid innovation difficult. Modern operators therefore prioritise catalog-driven architecture, agile/composable BSS, and cloud-native BSS capabilities to give business teams control over offer creation without relying on long IT delivery cycles. Faster launch cycles = faster monetisation.

 

3. What is slowing down product launch cycles for many telcos?

The primary obstacles are deeply entrenched in legacy architecture: hard-coded product models, outdated catalogues, nonstandard integrations, and heavy IT dependencies. These constraints slow down even minor product changes, creating friction between commercial teams and IT.
Modern telcos are replacing these bottlenecks with TMF-compliant BSS, cloud-native catalogues, API-driven BSS integrated via TMF Open APIs, and low/no-code configuration tools. These solutions allow product owners to create and test offers independently, ensuring the Digital BSS backbone supports true agility.

4. How can telecom operators reduce order fallout and manual intervention?

Order fallout typically stems from fragmented systems, inconsistent data models, and brittle custom integrations across BSS/OSS chains. When orchestration spans numerous legacy systems, even small discrepancies can cause orders to fail.
Operators can dramatically reduce fallout rates by adopting zero-touch service orchestration, modern order management modernisation, end-to-end automation, and a unified data model across their Digital OSS and Digital BSS layers. Cloud-native telecom systems and order orchestration for telecom remove reliance on manual rework, minimise delays, and improve service accuracy – all essential to delivering predictable customer experiences.

5. Why is accuracy so important for B2B and wholesale customer experience?

For enterprise and wholesale customers, trust is built on precision. A single misquote, incorrect configuration, or missed activation can lead to delays, SLA breaches, revenue disputes, and strained relationships. These segments rely on highly controlled, predictable fulfilment processes – particularly as operators expand into 5G edge services, network slicing, managed security, and outcome-based contracts.
Improving accuracy requires strengthening the underlying architecture – through modern CPQ for telecom, clean data models, cloud-native BSS/OSS, and robust API-driven telecom architecture. When quoting, ordering, provisioning, and billing are accurate, customer satisfaction increases naturally.

6. How does cloud, AI, and API-driven architecture support telecom modernisation?

Cloud-native platforms provide the scalability, flexibility, and deployment speed needed to support modern telecom services. AI introduces intelligence into operations, enabling predictive analytics, anomaly detection, and proactive assurance. APIs – especially TMF Open APIs – ensure new components integrate cleanly with legacy systems.
Together, AI-powered BSS/OSS, cloud-native architecture, and API-driven integration create a digital foundation that supports continuous innovation, reduces technical debt, and enables operators to deliver new services more efficiently. This trio is central to future-proofing the telco stack.

7. What is TM Forum’s Open Digital Architecture (ODA) and why does it matter?

TM Forum’s Open Digital Architecture (ODA) is an industry-standard framework designed to help telcos simplify, modularise, and modernise their BSS/OSS environments. ODA promotes interoperability, composability, and openness so operators can integrate new capabilities without heavy customisation or vendor lock-in.
For Tier-1 operators, ODA serves as a blueprint for transitioning from monolithic legacy stacks to cloud-native, API-driven, modular BSS/OSS infrastructure. By adopting ODA-aligned solutions, operators speed up integration, lower deployment risk, and reduce long-term operational cost.

8. How is Hansen involved in TM Forum and ODA?

Hansen aligns its architecture directly to TM Forum’s ODA principles and has contributed to the development of one of TM Forum’s recognised industry standards. This reinforces a commitment not just to following best practices, but to shaping them.
Hansen’s portfolio of cloud-native, AI-powered, API-driven Digital BSS/OSS modules is built on TMF Open APIs and composable design principles. This ensures seamless interoperability in multivendor environments and helps operators modernise safely and incrementally.

9. Can operators modernise their BSS/OSS without a full-stack replacement?

Yes – and in fact, most Tier-1 operators now prefer incremental transformation. Full-stack replacement is high risk, slow, and expensive. By contrast, modular modernisation allows operators to introduce new BSS/OSS capabilities – catalogues, orchestration layers, charging engines, customer management, monetisation components – without destabilising the existing ecosystem.
This approach reduces risk, accelerates value, and aligns with ODA’s principles of composability and openness. Operators can modernise at their own pace while still maintaining service continuity.

10. How does modular modernisation reduce risk?

Modular transformation focuses on improving specific parts of the architecture – such as product agility, order accuracy, unified data, or 5G monetisation – without changing everything at once. Each module is integrated, tested, and scaled independently, which reduces disruption and improves predictability.
It also allows operators to retire legacy systems gradually, reducing technical debt over time while still realising near-term efficiency and revenue gains. This is why agile/composable BSS is now the preferred model for Tier-1 telecom transformation.

11. What operational improvements can telcos expect from a unified data model?

A unified, AI-ready data model brings real-time visibility across commercial and operational processes, enabling faster decision-making and more reliable service execution. It also allows operators to detect issues earlier, automate root cause analysis, and reduce order fallout.
This consistent data foundation is essential for AI-powered BSS/OSS, predictive assurance, next-best-action recommendations, and advanced analytics. It ultimately improves operational efficiency, accuracy, and customer experience – three core pillars of modern telecom performance.

12. Why is Customer Experience (CX) tightly linked to operational excellence?

Most customer experience problems – delays, incorrect orders, billing errors, missed SLAs – originate from inefficiencies within the internal BSS/OSS engine. When operators modernise their Digital BSS/OSS processes, eliminate manual workarounds, and ensure accurate orchestration and service activation, the customer experience improves naturally.
This is particularly true for enterprise and wholesale customers, where CX is defined by precision, predictability, and contract performance. Improving CX requires improving the processes beneath it.

13. How do Hansen’s solutions fit into a Tier-1 telco transformation strategy?

Hansen provides cloud-native, API-driven, TMF-compliant, AI-powered Digital BSS/OSS modules that integrate smoothly into hybrid and legacy environments. Operators can use them to strengthen catalog agility, automate order flows, unify data, enhance monetisation, or improve service reliability – without needing to replace their entire BSS/OSS stack.
This flexibility supports transformation at the operator’s own pace, aligned to business priorities, regulatory requirements, and commercial objectives.

14. What benefits can operators expect from a layered or hybrid modernisation approach?

A layered or hybrid approach allows operators to combine existing systems with cloud-native components, enabling transformation without disruption. Key benefits include:
• Faster time-to-market for new offers
• Improved order accuracy and reduced fallout
• Lower cost-to-serve through automation
• Stronger customer experience
• Gradual reduction of technical debt
• Alignment with ODA and modular architecture principles
This approach balances stability with innovation – ideal for Tier-1 operators.

15. How do industry standards such as ODA accelerate telecom digital transformation?

Industry standards like TM Forum ODA and TMF Open APIs reduce integration complexity, promote interoperability, and give operators a trusted blueprint for modernisation. They ensure that new BSS/OSS components can plug into existing environments without custom engineering.
By reducing dependence on bespoke integrations and enabling modular deployment, standards significantly lower long-term cost and accelerate transformation across the business. They also future proof the architecture for new technologies, including AI, automation, and 5G service innovation.


 
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