Accenture’s CMT group revenue was adversely affected by a large, concluding contract, but will recover in 2014 due to operator demand for transformation services.
Accenture’s Communications, Media and Technology (CMT) operating group posted its fifth year-to-year revenue decline of the past six quarters as a single large contract in Europe continues to wind down. TBR believes the declining contract is Accenture’s deal with Nokia to manage Symbian operations. CMT revenue will again be driven lower by this contract in 1Q14 as Symbian smartphones continue to fade from the marketplace.
From 2Q14 to 4Q14, CMT is poised for a recovery driven by transformation projects for service providers. These projects, which tend to include both outsourcing and consulting components, are gaining popularity as operators look to hand off their back-office functions to companies such as Accenture, while also leveraging Accenture’s expertise to improve internal processes in a bid to reduce opex.
The Accenture Video Solution is receiving increased attention from broadcasters looking to improve their content delivery.
Accenture has a growing opportunity with broadcasters to enable content delivery across mobile devices and traditional PC and TV screens, develop broadcasters’ mobile presence, and provide managed services to ensure operations proceed smoothly. In December, Accenture announced it was providing BT Sport with the Accenture Video Solution (AVS) as well as managed services for the digital broadcasts and the BT Sport application. In November, Cricket Australia selected pieces of AVS to enable live streaming through the company’s official application. Accenture’s Video Solution is in high demand due to the global influx of smartphone subscribers and the shift of video consumption to mobile devices.
Accenture is sure to face stiff competition for broadcasters’ business from the telecom industry as Ericsson is increasingly signing up customers for its broadcast managed services solution. Ericsson is acting as a consolidator within the broadcast managed services space, acquiring Technicolor’s Broadcast Services division, Devoteam’s Telecom & Media division, and Red Bee Media within the past two years.
Accenture is able to differentiate itself in the broadcast services space by offering additional consulting and managed services that are not the strong suit of its competition, including application development and application management.
Accenture is adept at providing managed services that enable operators to focus on network improvements.
Accenture’s primary and most appealing offering for service providers remains managing and transforming IT and back office functions. Accenture is providing transformation services for some of Telenor Group’s operating subsidiaries in a five-year, $215 million contract. Accenture will streamline operations across finance, human resources, IT and procurement. Telenor Norway then selected Accenture in September to manage various IT systems, such as its sales, billing, and order systems. As part of the contract, 120 Telenor employees who previously managed Telenor’s systems were transferred to Accenture. Telenor recognizes Accenture’s ability reduce its opex and enable the operator to focus on network improvements.
Accenture reported revenues of $7.4 billion for the first quarter of fiscal 2014, an increase of 2 percent in U.S. dollars and 3 percent in local currency over the same period last year. Its operating income was $1.09 billion, an increase of 4 percent over the same period last year, and operating margin was 14.8 percent, a year-over-year expansion of 30 basis points.
Michael Soper, Networking & Mobility Analyst, Technology Business Research