Sprint Nextel delivered a blow to billing provider Convergys through its decision to migrate customers off of the provider's billing platform during 2006 and 2007. The merger between Nextel and Sprint left the industry's two dominant billing providers, Amdocs and Convergys, fiercely battling for business with the new operator. Nextel used Amdocs and Sprint outsourced its billing services from Convergys.
Convergys' loss of the business could have a material impact on revenues, analysts say. In 2005 Convergys' Information Management Group (IMG) generated approximately $100 million in revenue from Sprint Nextel at profitability levels comparable to the average of the IMG business. Convergys re-affirmed its earnings guidance for 2006 of at least $1.07 per share, but the company will have to find ways to make up for the huge revenue shortfall in 2007. The billing provider industry has become quite price aggressive, with vendors losing a lot of margin when competing for business.
Cingular Wireless was also left with two primary billing systems, Convergys and Amdocs, after completing its acquisition of AT&T Wireless. It appears that Cingular will continue with both vendors, recently signing an extension agreement with Convergys.
For more about Sprint Nextel's decision to end its deal with Convergys:
- check out this press release