CSG eyes biz chances in China's billing market

Updated: 2004-06-17 14:44

Billing giant CSG Systems is shifting its global focus to China, in preparation for its strategic entry into the nation's lucrative cable-billing market.

The company's growth engine over the next few years will be fuelled by China's booming telecommunications sector -- a vision described by CSG's senior executives as "strategically critical" for the firm's global deployments.

CSG Systems is negotiating with several major Chinese telecoms operators as it tries to rise to the top of the nation's billing services firms, sources close to the company said.

Those negotiations reportedly include China Telecom, the nation's largest fixed-line operator.

"Securing a deal with China Telecom would help CSG consolidate its foothold in the country, and beat its rivals in the global billing market," an industry insider said.

China Telecom provides services in 21 provinces and holds 70 per cent of the nation's trunk-line transmission network.

CSG Systems, which serves more than 265 telecoms providers in more than 40 countries, has seen its annual revenues jump six times in the past decade, said Neal Hansen, the company's chief executive officer.

"China will help us grow even faster in the future. That is why we have deployed a major part of our US$135-million global investment in the country," he said.

China's telecoms industry will grow an annual 10-14 per cent in each of the next four years, as its new 3G (third-generation) services are ready to be launched and mobile subscribers are increasing by more than 40 million each year, said Liu Fuchun, an industry analyst.

China's telecoms billing market is segmented, Xu Ming, CSG Systems' business development manager, said.

Provincial operators under the brand name can adopt solutions from different billing service providers, Xu added.

China's policy-makers, aware of the benefits of systems' mutual compatibility, are encouraging telecoms operators to integrate their billing systems so they can provide subscribers with bundled services, experts said.

This has created an unprecedented opportunity for experienced international billing players to win a share of the Chinese billing market, which has been dominated by domestic service providers, they said.

CSG's billing technology can support more than 10 million telecoms subscribers simultaneously, and can empower clients to deliver unparalleled customer services, including fixed-line, broadband and wireless telephony, Xu said.

South China's Guangdong Province has around 30 million fixed-line users, while most other provinces have more than 1 million subscribers.

"It is still unclear if telecoms operators will adopt one company's billing solutions for all their provincial subsidiaries. We hope we will find out soon," he said.

China and India, the region's two largest telecoms markets have been showing their strength, in terms of new product innovation, Hansen said.

"We will keep our commitment to these new emerging markets. We set up local R&D (research and development) centres, such as the one in Beijing, and believe localized technologies will serve our global client base rather than be used merely in local environments," he said.

CSG Systems last year teamed with IBM to sign up Beijing Telecoms as its first Chinese client. The billing firm provides solutions for the local operator's fixed-line, advanced IP, high-speed Internet and leased-line services.

CSG Systems' solid financial background has enabled the company to invest 10-12 per cent of its annual gross revenues in research, he said.

The company's stellar growth in billing and customer care solutions for wire-line, mobile, advanced IP services and broadband has made the firm an acquisition target.

Several weeks ago, US-Israeli services supplier Amdocs completed a due diligence study on CSG Systems. Merger talks are ongoing.

CSG Systems is a NASDAQ-listed company that recently completed an issuance of US$230 million worth of convertible debts to strengthen its financial footing.

CSG was established in 1994 as a cable service company. In 1996, CSG acquired CSG International Ltd, a UK-based customer management and billing services provider.