Ontario-based Redknee is a global provider of billing and customer management software to communications service providers around the world. Its flagship product is real-time billing software, which is integrated into wireless service providers' networks and supplies information about their clients' wireless usage.
Redknee was founded in 1999 and operates in a highly competitive market against giant network equipment providers Ericsson, Huawei, and Alcatel Lucent, as well as software companies SAP and Amdocs. Redknee has been able to distinguish itself with a tight focus on its in-depth niche expertise in billing solutions.
The telecommunications market is global, and in the late 1990s when Redknee was founded, the excitement and growth in the business was beyond the North America. “In Europe and emerging markets, 2G and 3G technology were being introduced," explains Chris Newton-Smith, vice president of marketing at Redknee. “Redknee followed our customers. As existing customers such as Digicel and the O2 Group expanded geographically, they wanted us to supply them."
Today, approximately 200 service providers use Redknee products, including global industry leaders Orange, Vodafone, and T-Mobile, which, collectively, serve one-third of the global population. With over 1,500 employees worldwide, Redknee is present in 90 countries.
Redknee's ambition has always been to be market leader in real-time monetization, and the company leveraged four key resources to make this happen: prior international experience of its management, deep foreign market knowledge through personnel on the ground, innovative and cutting-edge technology, and international networks dedicated to maintaining long-term relationships. All combined, these four resources have given Redknee a Global Competitive Advantage (GCA) over its competitors.
When it comes to the prior international experience of Redknee management, that resource was in place from day one. “The founders of the company were very internationally-minded people," says Newton-Smith. “Our CEO, Lucas Skoczkowski, is originally from Poland, and he founded Redknee with four co-founders from Singapore and India among other places. This automatically creates an international mindset."
An international network of foreign offices was also developed early on, and Redknee made sure to build trust and long-term relationships with customers by employing people who speak the local language and share the same culture as the client. This developed into what the company calls a “Customer for Life" corporate culture.
Much of the company's growth is organic, with new customers choosing Redknee based on the positive experience of subsidiaries or other customers. One case involved Vodafone's subsidiary in India, one of the fastest growing parts of the whole group. Although Vodafone invested in the launch of 2G data services, billing plans were not working out. Redknee was able to step in and complete a monetization project in 99 days, enabling Vodafone India to become one of the largest data providers in the world, with 100 million subscribers running on the Redknee platform.
This performance, combined with its Customer for Life culture, shows why Redknee has never lost a customer in 15 years, according to Newton-Smith. “It's a core part of our company's DNA and a reason new customers come to us. We have demonstrated over the years that we are able to solve problems and put our customers on the path to success," he says. “We are agile and have a mindset to solve problems quickly and innovatively."
Focusing on a niche portion of the telecommunications market has allowed Redknee to develop a highly customizable product line that meets the core needs of wireless providers. Ongoing technological innovation allows for regular updates to the software allowing Redknee to meet the evolving needs of customers.
Operating in so many jurisdictions requires banking support at both the local and global level. As vice president of corporate finance at Redknee Solutions, Anin Basu understands the importance of collaboration for a company aiming to realize the global ambitions of its founders. “HSBC has been our bank almost since our incorporation, and as our company has grown geographically, we have been able to leverage HSBC's network in that process," he says.
“Geographically we have grown very quickly, symbolic of how much we have in common with HSBC, they have always been able to support our international ambitions with their global reach," Basu adds.
Jesse MacMasters, Head of Large Corporate Banking, Ontario at HSBC Bank Canada, adds: “Redknee uses HSBC's cash management and global trade finance services. As a Canadian company with a global presence, we act as a central point for their day-to-day operations and international transactions, and we are able to delegate to our in-country teams to meet their needs locally."
As a public company listed on the Toronto Stock Exchange, Redknee must be vigilant regarding financial risks to its business. HSBC monitors compliance and local regulatory responsibilities for Redknee globally.
“HSBC is a compliance-oriented institution that makes sure we are transacting in accordance with local rules, and it keeps IT security as a prime concern every single day," says Basu.
Indeed, MacMasters adds, “Some markets are more complicated than others and have more restrictions and requirements, and so we are there to help with the necessary due diligence, and ensure full compliance with local regulations."
Much of Redknee's geographic growth has been the result of strategic acquisitions overseas: Argent Networks in Australia in 2008; Nimbus Systems in Spain in 2010; and two in Germany --a division of Nokia Siemens Networks (NSN) in 2013 and, most recently, Orga Systems.
“Most of the acquisitions have been through cash on balance sheet, so there needed to be consolidation of funds before the transactions could be completed," Basu notes. “HSBC ensured this happened as smoothly as possible."
A game-changing moment for Redknee in this respect was the 2013 acquisition of the business support systems division of Nokia Siemens Networks. It was a large, complex acquisition because Redknee was approximately only one-quarter the size of the division it was acquiring.
Redknee had to incorporate more than 20 legal entities in different parts of the world. “We had to set up corporate books, banking relationships, payroll and benefits providers, and over all of that, we had to develop customer relationships," Basu points out. “HSBC made setting up banking services a straightforward process."
Following the acquisition, Redknee's revenue from EMEA and Asia-Pacific quadrupled, now making up 80% of annual turnover. Acquisition plans remain aggressive. “We expect to acquire one to two companies per year going forward, and HSBC will be a key part of that," says Newton-Smith.
Beyond telecoms, Redknee is looking to take real-time monetization software into other areas of payment and subscriber interaction, such as the “connected car" segment, public transport, and the pre-paid subset of the energy market.This expansion of the product set into other verticals raises new challenges for Redknee and HSBC, including variations in customer and vendor contracts that make working capital management more complex.
“HSBC continues to be a good financial advisor, suggesting trade finance products such as factoring, and more efficient and robust ways of transferring money to other parts of the world. This has improved our business greatly," says Basu.
Being international and having a targeted focus remain as core competitive advantages for Redknee, and HSBC is instrumental in supporting their ambitions. “We look forward to assisting Redknee with all of their banking requirements going forward," MacMasters adds. “We specialize in helping Canadian companies achieve their international potential, and Redknee is a great customer and a prime example of that. We definitely see the relationship continuing to grow."
Click here to read Selling to the World: The Keys to International Business Success, a new report commissioned by HSBC from the Conference Board of Canada to learn more about how your company can “sell to the world” by sharpening your global competitive advantage.
*Published in June 2015.
Source: Selling to the World: The Keys to International Business Success, June 2015
Note: The opinions expressed by featured companies do not necessarily represent the views of HSBC Bank Canada and likewise the opinions expressed by HSBC Bank Canada do not necessarily represent the featured company's view.
The information presented is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without first obtaining specific professional advice. While reasonable care has been taken in preparing this document, HSBC does not make any guarantee, representation or warranty (express or implied) as to its accuracy or completeness. The information presented in this document is subject to change without notice.
Certain of the products and services offered by HSBC and its subsidiaries and affiliates are subject to credit adjudication and approval. This document does not constitute an offer to provide the services and products described and the provision of such services and products remains subject to contract.
HSBCnet services are provided in Canada by HSBC Bank Canada. HSBCnet features and functionality vary by country. Subject to Canadian sanction regulation
Issued by HSBC Bank Canada ("HSBC")
© Copyright HSBC Bank Canada 2017. ALL RIGHTS RESERVED.