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Thursday , Aug 13, 1998 Sun-Thu at 18:00 (GMT+3)
Communications Features
TTI Gets Promoted
By Efi Landau
The fifty billion dollar privatisation and deregulation process
presently under way in Brazil could herald a commercial breakthrough for
Israeli communications manufacturers already operating in that market.
One of them is TTI Team Telecom International, whose Netrac products
serve linear and wireless telephony companies for the control of their
communications networks.
The company also recently signed a strategic agreement with IBM
International, whereby IBM will market Netrac products to the North
American market. IBM may not be the Cisco of data communications, but
this is the sort of contract that can boost TTI1s chances of landing fat
contracts in the future. Its second quarter results, published last
week, are starting to reflect the latest contracts signed. The company1s
revenues have risen 54% compared to the corresponding quarter last year.
Operating profit is up 67% and net profit posts a 30% increase.
The company1s OSS/NMS computerised telecommunication network management
systems give the operator an up-to-the-minute picture of the network,
pinpoint trouble-spots, recommend solutions and assist with routine
network operation. They serve warning of malfunctions by means of
real-time alarm, report on calls traffic status, and identify
exceptional situations. They also facilitate network control, so that
the various network elements can be sent orders. Network fault reporting
and correlation, performance management traffic flow and routing
analysis as well as configuration planning are examples of the
capabilities provided by Netrac.
In 1995, research firms Data Pro and Insay Research estimated the
OSS/NMS management systems market at $15 billion, forecasting that it
would grow to $30 billion by year 2000. These figures also include
collection systems. Collection systems represent about one fourth of the
OSS (operation support systems) market and accordingly the engineering
NMS (network management systems) amounted to $12 billion in 1995. By
year 2000, the forecast is that it will reach $15 billion.
At the beginning of the nineties, the bulk of the market was held by
operators, who developed the management systems themselves. As
competition in the industry mounted, operators started to downsize,
shedding activities not directly connected with network operation.
Opportunities thus opened up for software firms specialising in NMS
system development.
TTI grew out of Israel's Team computerisation group, which operated as a
hardware house. In the eighties, the group1s owners also decided to
develop software. At the end of the eighties, Bezeq asked Team to
develop a program for dealing with a certain control function and that
was how TTI was born. Bezeq kept placing orders, and the company
garnered a great deal of know-how and experience in control and
telephony.
Team Telecom International TTI was founded in 1992 as a wholly owned
subsidiary and began undergoing a process of change and conversion.
Rather than operating in response to orders, it would henceforth develop
products. TTI defined its main field of expertise as OSS, the
development of control and management systems for telecommunications
networks for telephony companies.
The company today is the principal supplier of management and control
systems to telephony companies in Israel, and, in practise, all the
control systems of Israel's four telecom service providers - Bezeq,
Bezeq International, Pele-Phone and Cellcom - are based on its systems.
The company has a payroll of 130. Its seven products serve warning of
network malfunctions and faulty performance, update modifications, fill
security functions, categorise users and constitute an interface with
billing and collection systems.
Over the years, the company perfected Netrac, the product on which TTI1s
telecom applications are based. The product was constructed using fourth
generation development tools, emphasising the standard of a flexible,
open, modular system, able to adapt to the customer1s requirements.
An important turning point came when TTI won the 1992 Data General
tender for a network management control product. Under this contract,
TTI supplied control software for the telephony company of Edmonton,
Canada. "We realised we had something to offer, and we started taking
part in more and more tenders", says Team founder and company Chairman
Meir Lipshes. In 1992, its sales turnover in Israel amounted to $1.2
million. In 1997, turnover amounted to $12.1 million, of which products
accounted for 66.5%.
Following this, the company was awarded contracts in Colombia and
Hungary. In 1993, TTI won a major contract in Colombia for the telephony
company in the town of Medellin. The project includes the development
and installation of control and management systems and also traffic
management and control services. In 1994, the company develop a service
quality control system for the telephony network in Hungary. Another
project was the development of a control system for a signalling network
using the System 7 method, for LCI of the US. The system was the only
one of its kind in the world when installed.
The company offers three product families: a basic package of modules
adapted to the customer; products adapted to certain protocols and sold
as off-the-shelf products; and the installation of various elements in
systems by the OEM method. The traditional market consists of existing
companies wishing to upgrade their products. The new market consists of
new companies wanting to have control systems installed as fast as
possible, in order to compete on a market that has opened up to
competition.
TTI1s competitors world-wide (it has none in Israel), fall into three
categories: mammoth telecom manufacturers such as Nortel and Alcatel,
which compete for major projects; equipment companies such as IBM, HP
and Digital; and similar companies such as OSI and TESI.
Team holds 63.5% of the company1s shares, while the balance are traded
on the NASDAQ. Revenues in 1997 amounted to $12 million, and 50% growth
is expected in 1998. The company1s net profit, which in 1997 amounted to
$2.2 million, is expectedly to slightly outstrip sales growth in 1998,
rising to $3.4 million.
Q1 profitability was down, but the reason, according to Lipshes, was a
considerable increase in the customer base. In the first quarter,
Lipshes says, the company obtained orders from six new customers. The
biggest orders came from Brazil1s two cellular concessionaires, each
agreement amounting to $10 million. TTI1s share is $4-5 million. TTI
also signed an agreement with Bezeq for the sale of a network traffic
simulation system. The system is based on an advanced simulation product
of Canada1s JADE, and TTI will expand and adapt it to Bezeq1s
requirements.
TTI, like other Israeli companies, entered the Brazilian market via the
system it established for Cellcom. Cellcom1s foreign owners are the
Safra bank of Brazil and Bell South of the USA, which operate in Brazil
via BCP. They won a tender for setting up a second system in Sao Paolo,
which has 18 million inhabitants. TTI works in Brazil with a local
partner which competes in tenders. The contract with BCP amounted to $10
million, in which TTI1s share was $3 million.
The Brazilian-Israeli partnership was also awarded a contract for the
supply of a management and control system to the cellular company of Rio
de Janeiro, amounting to $3 million. A third contract was signed with
international calls company Embratel, actually with its sub-contractor,
Alcatel of France, and here, TTI1s share came to a million dollars.
The strategic co-operation with IBM in the North American market opens
up further business possibilities for it. TTI1s strategy of selling
directly while at the same time establishing strategic co-operation
agreements, is not new. Before IBM, there with Nortel, in the cellular
field, ECI Telecom (which also holds 5% of the company1s shares),
Motorola and Siemens.
Published by Israel's Business Arena August 12, 1998 |
