HCLTech to buy Hewlett Packard’s communications tech assets for $225 million

BENGALURU: HCLTech, India's third largest IT services provider, has decided to acquire select assets of Communications Technology Group, a business division of Hewlett Packard Enterprise (HPE) company, for $225 million (around Rs 1,870 crore) in cash consideration.

As part of this agreement, HCLTech will also absorb around 1,500 employees and 700 contractors with experience of engineering services for telecom industry in countries including Spain, Italy, India, Japan, China, Americas and APAC region, HCLTech said in a regulatory filing on Thursday.

“Through this arrangement, HCLTech will acquire industry-leading intellectual property (IP), engineering and R&D talent and client relationships with top global Communication Service Providers (CSPs),” the filing stated.


The acquired assets provide engineering telecom services for CSPs in Europe, Japan and North America. HPE will retain the part of its former CTG business focused on Operations Support Systems (OSS).

The transaction, which does not include purchase of shares, is expected to close in 6 to 9 months subject to regulatory approvals and other customary closing conditions.

With the asset purchase, HCLTech said it will gain a portfolio of service offerings that includes industry-leading IP, solutions and systems integration around business support systems (BSS), network applications, service cloudification and data intelligence.

“These capabilities will also complement HCLTech’s existing highly digitised services with artificial intelligence (AI), Internet of Things (IoT), and data-driven models; enhanced efficiency; frictionless integration; and an end-to-end partner ecosystem,” the statement said.

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 work for HPE's telco customers and partners.

“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 that include 20 of the Top 30, accelerating our growth strategy in the global telecom industry,” said C Vijayakumar, CEO and managing director of HCLTech.

HCLTech’s fourth quarter (January to March) FY24 revenue growth was led by telecommunications, media, publishing & entertainment, which has a revenue share of 11.5%. It grew by 39.2% year-on-year and 21.6% sequentially. Its total revenue for Q4FY24 stood at Rs 28,499 crore and $3.43 billion in dollar terms, up 7.1% and 6% YoY, respectively.

Meanwhile, engineering and R&D constitutes 16.1% of its segmental revenue share which grew by 6.4% YoY yet degrew by 1.6% from previous quarter.