Oracle Acquires Tekelec to Pursue Telco Market: Manage, Control & Analyze IP Traffic

Less than two months after buying Acme Packet, Oracle has announced that it has agreed to acquire Tekelec, a leading provider of network signaling, policy control, and subscriber data management solutions for communications networks. The company has also  been an innovator in IP traffic shaping.

Tekelec specializes in critical elements of the modern IP carrier network where the networking and IT software operations converge.  This is the area where Oracle sees its opportunity to expand in the telco market – by bringing its data center and IT systems to telecos and taking on incumbent telco vendors like Ericsson.

Financial terms of the deal were not disclosed. Tekelec has been considered a potential acquisition target since it went private in November 2011. It was then acquired by a group led by private equity firm Siris Capital for $761m, a deal which many believed undervalued the company.  Tekelec made a name for itself in the 1980s and 1990s by specializing in test equipment and then converting to a VoIP software company. 

Last month, Oracle paid $1.7bn for Acme Packet, which specializes in VoIP and IP traffic equipment, notably session border controllers.  We analyzed that transaction in this article:

It appears that Oracle is building a group of software technologies  which help network operators control and manage IP traffic and analyze it in detail, in order to impose policies such as offload or premium charging – increasing the ability to monetize the exploding traffic. In particular, it is now a major force in signalling, taking players like F5, which acquired Diameter specialist Traffix over a year ago.  With the Tekelec and Acme Packet acquisitions, Oracle will be in a better position to compete with Cisco Systems, which has recently bought policy management firm BroadHop.

“In an increasingly mobile and social world, customer experience is about optimizing network performance and personalizing services based on what engages, moves, and inspires people,” said Ron de Lange, president and CEO, Tekelec, in a statement. “Together with Oracle, we expect to accelerate the pace of service innovation by helping service providers transform the way they manage and monetize the explosive growth in signaling and data traffic on their networks.”

“Oracle has in the past partnered to provide these capabilities, but by bringing them in house it will have more opportunity
to shape the roadmap and combine the capabilities in a more tightly-coupled solution,” wrote Ovum principal analyst Dana Cooperson in a research note. “Expect Oracle’s telecom focused competitors (Alcatel-Lucent, Huawei, Ericsson) and its IT-focused competitors (HP, SAP, SAS Institute) to do more strategic soul searching and, as their financial situation allows, to pursue acquisitions of their own.”

“As connected devices and applications become ubiquitous, intelligent network and service control technologies are required to enable service providers to efficiently deploy all-IP networks, and deliver and monetize innovative communication services,” said Bhaskar Gorti, general manager of Oracle Communications, in a statement.

In addition to its software products, Tekelec owns hundreds of patents and applications in the communications space. This is an area that Oracle has not hesitated to explore in the courtroom, and given the billion-dollar-plus sums involved in some patent battles, this could have bumped up the pricetag for Tekelec somewhat higher.