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HCL Tech has signed an agreement to purchase the Telco Solutions business of HP Enterprise. This deal will be worth up to $160 million and will be entirely in cash. This acquisition will strengthen HCL Tech’s 5G and AI-based network capabilities, while helping HP Enterprise focus more on its networking business.
New DelhiIT services company HCL Tech has taken a big step to strengthen its presence in the telecom sector, The company has signed an agreement to buy the Telco Solutions business of HP Enterprise, HCL Tech has clarified that this is not the acquisition of the entire HP company, but a specific business unit of HP Enterprise is being purchased, This deal is part of HCL Tech’s strategy to strengthen its engineering and AI based network services, The company’s focus is on providing 5G and advanced network solutions for global communication service providers,
The telco solutions business that HCL Tech is buying is part of the Communication Technology Group of HP Enterprise. The business supports more than one billion devices through more than 200 deployments worldwide. This unit has capabilities like operations support system, home subscriber server, 5G subscriber data management and AI based network automation. With this, HCLTech will get industry intellectual property, product engineering and research talent.
Deal terms and timeline
The acquisition is an asset carve-out deal, which does not involve any share transfer. The entire amount will be given in cash. The total deal value could be up to $160 million, which includes $15 million as performance-linked incentives for FY 2025. The deal requires regulatory approval in different countries, which also includes America’s CFIUS approval. The company hopes that this deal will be completed within about 6 months of signing.
What will HCL Tech get?
With this acquisition, about 1,500 engineers and telecom experts will join HCL Tech’s global team. These professionals are associated with 39 countries. This will further strengthen HCL Tech’s engineering capability and global delivery network. The company will use this technology and talent to advance 5G network transformation, network cloudification, network as a service, autonomous networking and AI native networks.
What is the benefit of HP Enterprise?
This deal is an opportunity for HP Enterprise to increase focus on its networking business. The company believes that HCL Tech will be able to scale in a better way given the current pace and customer base of the Telco Solutions business. According to HP Enterprise Management, this step will help in driving both innovation and customer impact.
stock market reaction
After the announcement of this deal, shares of HCL Technologies closed at Rs 1,663 on BSE on Thursday with a rise of 0.48 percent. This deal is being considered important in the market for HCLTech’s long term telecom and AI strategy.
