CSG finishes strong in 2024 amid M&A rumors swirling around – TelecomTV
CSG Systems, a provider of digital support systems (DSS), has closed out the year 2024 with impressive financial results that have heightened speculation about potential merger and acquisition (M&A) activities surrounding the company. The Denver-based vendor, specializing in billing and customer care systems, saw a 6.5% increase in fourth-quarter revenues, reaching nearly $317 million, marking the highest quarterly sales figure in its history. Additionally, CSG reported a 71% surge in operating profit, amounting to $42.3 million.
Industry rumors suggest that Japanese technology giant NEC is eyeing a possible takeover bid for CSG. NEC is already the owner of Netcracker Technologies, a prominent player in the digital enablement systems space, focusing on billing, charging, mediation, and customer experience management solutions. The potential acquisition of CSG by NEC to merge it with Netcracker could have become more attractive following CSG’s robust financial performance.
For the full year 2024, CSG’s revenues reached nearly $1.2 billion, representing a 2.4% increase, while its operating profit climbed by 6% to $131.3 million. The company revealed that a significant portion of its revenues, with 52%, comes from the cable/satellite operator sector, 18% from telecom operators, and the remaining 30% from customers in various industry verticals. Notably, CSG’s key clients include major US cable operators Charter Communications and Comcast, contributing a significant portion to its total revenues in 2024.
Looking ahead to 2025, CSG anticipates a slight increase in full-year revenues, ranging between $1.21 billion and $1.25 billion. During their earnings call, CEO Brian Shepherd highlighted several new customer deals and contract expansions secured by CSG in the fourth quarter of 2024. These wins included agreements with prominent organizations such as Gamma Communications, MTN South Africa, Saudi Arabia’s Mobily, M1 of Singapore, and a pivotal six-year contract renewal with Comcast, reinforcing the company’s position in the market.
Furthermore, CSG’s successful deployment of its cloud-native digital enablement platform Ascendon with telecom operators such as Telenor Denmark, Lyse in Norway, and Claro in Brazil underscores a growing trend among wireless carriers to transition their core billing and monetization systems to the cloud, showcasing the platform’s potential for revenue growth in partnership with AWS.
The positive fourth-quarter and full-year performance, coupled with CSG’s plan to increase cash dividend payments in 2025, drove a 2.8% increase in the company’s share price to $61.66 on the Nasdaq exchange. While discussions around a possible acquisition by NEC persist, CEO Brian Shepherd emphasized the company’s commitment to delivering strong results and maintaining its operational focus.
Analysts, however, remain cautious about the feasibility of an NEC takeover of CSG. John Abraham, a principal analyst at Appledore Research, expressed skepticism regarding the potential acquisition, citing NEC’s already established presence in the BSS sector through Netcracker. With Netcracker holding a significant share of the market and CSG experiencing substantial growth, questions arise about the strategic benefits of a merger between the two entities. Despite ongoing M&A speculation, CSG remains focused on its operational performance and delivering value to its shareholders in the evolving telecom landscape.
