Comptel acquires UK-based Axiom Systems

Press Release -22 April, 2008

Comptel acquires UK-based Axiom Systems to capitalize opportunities from operators' growing investments in IP-based services

HIGHLIGHTS OF THE AXIOM TRANSACTION

Comptel is strengthening its position as a leading provider of fulfillment solutions for broadband, mobile and next-generation IP networks by acquiring Axiom Systems (Axiom), a UK-based software product company focusing on the broadband fulfillment market. The acquisition gives Comptel a strong position to capitalize the growing investments of service providers to new IP-based services, like VoIP and IPTV. Axiom is a specialist in IP fulfillment and has a good market position in Europe as well as key customers in Asia-Pacific. Net sales of Axiom were GBP 7.8 million (EUR 11.5 million) and the company was EBITDA negative in 2007. Axiom has currently 87 employees. The net sales in 2008 are estimated to grow about 15%. Consolidation of Axiom is estimated to increase Comptel net sales around 10% in 2008. Axiom's EBITDA impact to Comptel in 2008 is expected to be neutral before one-off items, which are estimated to be EUR 1 million.

Mr Sami Erviö, President and CEO of Comptel, comments: "I am enthusiastic about this acquisition, since now Comptel is uniquely strongly positioned to support its customers in automating the delivery and management of new IP-based services like IPTV. With Axiom we are a leading provider of service fulfillment solutions for fixed, mobile and convergent operators and service providers. Axiom has excellent IP network competencies and has proven capabilities for next generation service fulfillment. Together we are well positioned globally and especially strong in Europe, Asia-Pacific and Middle East. We now have the right competencies, the leading customers and the presence to gain market share in the emerging all-IP network based fixed-mobile convergent telecom industry."

TRANSACTION

Comptel Corporation is acquiring Axiom Systems Holdings Limited for a cash consideration of GBP 7.0 million (EUR 8.9 million). Comptel Corporation pays additional purchase price if Axiom Group's audited net sales in 2008 are more than EUR 13.5 million. The additional price may vary between GBP 4 and 16 million. The maximum amount will be paid if Axiom Group's audited net sales in 2008 reach EUR 21.6 million. The additional purchase price comprises of both cash and Comptel shares.

Axiom Group's balance sheet will be free of interest bearing debt and will have a positive net working capital balance. The acquisition is financed through Comptel Corporation's liquid assets and by raising approximately EUR 5.0 million of debt. In case additional purchase price is paid, a maximum of 4.8 million new Comptel shares will be issued.

The acquisition is completed on 21 April 2008 from which Axiom Group will be consolidated. The main selling shareholders are private equity funds managed by Geocapital Partners, Hg Capital and Axiom's management.

The annual cost synergies from the transaction are estimated to be EUR 2 million starting from 2009. One-off items of restructuring and integration costs are estimated to be EUR 1 million in 2008. Furthermore, Comptel expects revenue synergies to realize 2009 onwards from cross-selling the convergent dynamic OSS solution to existing Axiom and Comptel customer bases and by leveraging Comptel's stronger market position outside Europe to increase Axiom's solution sales. The project for integrating the businesses is estimated to be completed by the end of 2008.

Mr Gareth Senior, CEO and CTO of Axiom Systems will continue in his role as the CEO of Axiom. He has been also nominated as a member of Comptel Group's Executive Board.

STRATEGIC RATIONALE

Telecom service providers and operators are currently investing in the next generation IP networks in order to provide their customers a richer set of services (VoIP, IPTV, etc.) and achieve profitable growth based on this. A central business challenge for service providers is delivering and managing the services for their customers efficiently and timely. To achieve this, the operators need integrated IT systems to manage the process and information flows when activating subscribers and services in the network (Provisioning) and storing the required business and technical information (Inventory). Coordinating this activity is particularly complex for (currently fixed-line) broadband operators. They require a central system (Order Management) to manage the process in an efficient way. With the introduction of the all-IP networks, the service providers will be offering convergent broadband services through both fixed and mobile channels. This is a major growth opportunity, but requires investment in a convergent OSS (Operations Support System), where fulfillment is a major component.

Currently broadband service based on fixed infrastructure is fairly developed but has still substantial growth potential in Western Europe and the US. In other markets it is still emerging. The global market for broadband fulfillment solutions is estimated to be USD 550-650 million in 2007, whereas the mobile provisioning market is USD 300-570 million. Both markets are expected to grow between 10-20% annually in the next three years (source: OSS Observer).

Axiom is a recognised player in the broadband fulfillment markets. It has special expertise in broadband and IP technology and business, and good customer references. Axiom's product offering is an end-to-end fulfillment suite that includes Order Management, Service Inventory, Service Activation and Active Catalog. Its products are characterised by high-level of modularity and configurability, allowing them to be tailored into different solutions that meet customers' specific business needs. Axiom has 35 customers, out of which 25 are in Europe and 4 in Asia-Pacific and 4 in North America. The clientele includes British Telecom, Austria Telecom, Deutsche Telekom, Telecom New Zealand, Singtel in Singapore and TeliaSonera. Axiom's software is mainly sold and delivered through partners like Alcatel-Lucent, TietoEnator, T-Systems and Wipro.

The acquisition is part of Comptel's long term growth strategy to become the world's leader in end-to-end Operations Support Systems (OSS) for communications service providers and operators. Axiom provides a strong set of competencies, technologies, valuable customers and market position supporting Comptel in the IP broadband and convergent service provider market segments. Acquiring Axiom complements Compttel's offering with Order Management product and strengthens Comptel's IP technology competencies.

COMPTEL FUTURE OUTLOOK

Comptel Corporation will update the outlook for 2008 in its first quarter interim report, which will be published 23 April 2008.

Axiom Systems

Axiom was established in 2000 when Axiom acquired Intellectual Property Rights from British Telecom for the work Axiom's founders had been providing as IT services to British Telecom's IP network. Axiom's head office and operations are located in Reading, UK. It has sales offices and representatives as well as customer services staff overseas.

Axiom has been mainly focused on Western European markets. Recently it has started to develop business also in Eastern Europe, Middle East and Africa and Asia-Pacific. Axiom has been particularly successful in achieving growth through partners. Consequently, its business model has a high operating leverage as a significant portion of its revenues are generated through pure license deals.

Axiom offers a complete fulfillment solution for different business needs of broadband service providers and operators. The offering consists of a service inventory, order management and activation components. Through different combinations and configurations of these components Axiom creates business solutions, like VoIP and IPTV provisioning, for service providers. Recently Axiom has created Active Catalog, which is a service catalogue enabling automatic provisioning of different solutions.

Comptel Corporation

Comptel provides Comptel Dynamic OSSTM solutions, enabling telecom service providers to deliver services flexibly and charge for them effectively. Comptel's expertise in inventory, provisioning and activation, mediation and charging empowers service providers to focus on delivering the innovative services. Established in 1986, Comptel has around 550 employees worldwide. In 2007, net sales were EUR 82.4 million and operating profit reached 20% of net sales. Comptel has provided solutions to 260 customers with 500 million subscribers in 85 countries. www.comptel.com

Comptel Corporation
Sami Erviö
President and CEO

Additional information:
Mr Sami Erviö, President and CEO, tel. +358 9 700 1131
Mr Veli Matti Salmenkylä, CFO, tel. +358 50 2813
Mr Samppa Seppälä, Director, IR and Corporate Communications,
tel. +358 50 568 0533

Source : http://www.comptel.com/default.asp?docId=19313