A leading provider of customer relationship management (CRM), Amdocs Limited (DOX) recently won a deal from telecom operator Vodafone (VOD) in Germany. As per the contract, Amdocs will upgrade Vodafone Germany’s operating platform to Linux-based system in order to support huge data size on a daily basis.
Vodafone D2, Vodafone’s subsidiary in Germany, is the leading telecom operator in the country with a subscriber base of more than 36 million. With the growing popularity of smartphones and the forthcoming launch of high-bandwidth LTE services, the need for data management is expected to increase further. Amdocs intends to manage this huge data network through Amdocs Mediation 8. Amdocs Mediation handles all service types (voice, data or content), payment plans (prepaid or postpaid, fixed or content-based billing) and processing modes (real time or batch).
Amdocs is expected to process more than 400 million data network events each day. By deploying Amdocs Operational Support Systems (OSS), Vodafone D2 will not only manage data traffic but also reduce the cost of network management. Moreover, the company can install the OSS software in less time.
With the growing popularity of smartphones and tablets, the demand for data management will increase significantly. Moreover, as more and more telecom operators start deploying 3G and 4G networks, it will further increase the need for better data management. Hence, the future of Amdocs seems to be very promising. These factors along with a strong balance sheet and zero debt will act as positive catalysts in the coming quarters.
However, we believe that profitability may suffer primarily due to higher expenses for productivity improvement, suspension of program implementation at Clearwire and emerging markets sales opportunities. The company is still facing demand softness in the European regions and also in the North American markets.
We, thus, maintain our long-term Neutral recommendation forAmdocs Limited. Currently, Amdocs Limited has a Zacks#2 Rank, implying a short-term Buy rating on the stock.
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