IT company HCLTech will acquire certain assets of Hewlett Packard Enterprise's Communications Technology Group (CTG) for USD 225 million, about INR 1,874 crore, in an all-cash deal.

As part of this agreement, approximately 1,500 employees and 700 contractors with experience in engineering services for the telecom industry in various countries -- including Spain, Italy, India, Japan, China, Americas and APAC region -- will be transferred to HCLTech, the companies said in a note.

HCLTech in a regulatory filing mentioned that the deal is for the "purchase of certain assets (CSS) of Communications Technology Group, a business division of Hewlett Packard Enterprise Company. CSS delivers engineering services to leading global Communications Service Providers (CSPs) leveraging its intellectual properties in a global delivery model" for which "total purchase price is USD 225 million".

The deal will strengthen HCL Technologies' presence in the telecom vertical by expanding its engineering services and leveraging CSS' IP, solutions and talent at leading CSPs in Europe, Japan, the Americas and the APAC region, including 20 of the top 30 CSPs globally.

"With this transaction and our planned strategic partnership with HPE, we are strengthening our telecom practice to address the rapidly expanding and transforming global telecom market. With the incoming top engineering talent and industry-leading IP from the CTG group of HPE, we are adding significant capabilities and direct relationships with global CSPs," HCLTech CEO and Managing Director C Vijayakumar said.

This transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in six to nine months.

The Telco Solutions group, which sits within HPE Aruba Networking, is a leader in OSS, orchestration and assurance -- as well as public 5G SDM and private 5G networking -- and will continue to deliver value for HPE's telco customers and partners.

This transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in six to nine months.

"In joining HCLTech, our Communications Technology Group will become part of a strong partner that understands and appreciates the significant heritage of our CTG business, its strategy and its potential for the future," HPE President and Chief Executive Officer Antonio Neri said.

Benefits of the Acquisition for HCLTech

The acquisition of HPE’s CTG assets is expected to provide HCLTech with several key benefits, including:

• Enhanced Expertise in Telecom Engineering Services: The addition of 1,500 employees and 700 contractors with experience in telecom engineering services will significantly bolster HCLTech’s capabilities in this area. This will allow the company to offer a wider range of services to its clients and expand its reach in the telecom market.
• Expanded Intellectual Property Portfolio: The acquisition will give HCLTech access to HPE’s valuable IP in the telecom sector. This includes patents, trademarks, and copyrights that can be leveraged to develop new and innovative solutions for HCLTech’s clients.
• Stronger Relationships with Leading CSPs: HPE has established relationships with some of the world’s leading CSPs. The acquisition will allow HCLTech to leverage these relationships to expand its own client base in the telecom industry.
• Improved Competitive Advantage: The combined strengths of HCLTech and HPE’s CTG assets will create a more competitive player in the telecom market. HCLTech will be better positioned to compete with other large technology companies that are also targeting the telecom sector.

The acquisition of HPE’s CTG assets is a significant development for HCLTech. The deal is expected to strengthen HCLTech’s position in the telecom industry and provide the company with several competitive advantages. HCLTech is well-positioned to capitalise on the growth opportunities in the telecom sector and deliver value to its shareholders.

Shares of HCL Technologies Ltd ended at INR 1,353.40, up by INR 10.30, or 0.77% on the BSE.

Article Source - PTI