Amdocs Ltd (DOX) 2005 Q4 法說會逐字稿

Good day, everyone, and welcome to this Amdocs fourth quarter 2005 earnings release conference call. Today's call is being recorded and webcast. At this time lie turn the call over to Mr. Tom O'Brien. Please go ahead, sir.

I'm Tom O'Brien Vice President of Investor Relations for Amdocs.

Before we begin, I would like to point out that during this call we will discuss certain financial information that is not prepared in accordance with GAAP. The Company's management uses this financial information in its internal analysis in order to exclude the effect of acquisitions and other significant events that may have a disproportionate effect in a particular period. Accordingly, Management believes that isolating the effect of such events enables Management and investors to consistently analyze the critical components and results of operations of the Company's business and to have a meaningful comparison to prior periods.

Also, this call includes information that constitutes forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risk and uncertainties that may cause future results to differ from those anticipated.

These risks include, but are not limited to, the effects of general economic conditions and such other risks as discussed in our earnings release today and at greater length in the Company's filings with the Securities and Exchange Commission, including in our annual report on form 20-F, filed December 30, 2004, and our Form 6-K furnished on February 14, filed on May 16, and August 15 2005.

Participating in the call are Dov Baharav, President and Chief Executive Officer of Amdocs Management Limited, Eli Gelman, Executive Vice President, and Ron Moskovitz, Chief Financial Officer. Following Dov and Ron's comments we will open the call up to Q&A. Now, let me turn the call over to Dov Baharav.

Thank you. Good afternoon, ladies and gentlemen.

We are pleased to report that this was a very significant quarter for Amdocs in a number of areas. Our financial results this quarter demonstrate success in our business as revenue grew 26.7% and earnings per share excluding acquisition-related costs and restructuring charges grew 30%.

For the first time in our history we crossed the $2 billion mark in annual revenue. This is important in our world today because size matters in dealing with large carriers and consolidating markets. These very large carrier want to deal with a small number of very large vendors who have the scale and breadth to serve them on a worldwide basis.

When we analyze the market, we see a continuation and in some case an acceleration of the transform within quarters while carriers are moving forward and building the business and system infrastructure needed to offer new services such as data and IPTV which allows them to meet the change from the broadband cable and satellite company.

We see voice-over IP activity taking off. Quantum providers are investing in voice capabilities. Broadband cable companies are teaming up with wireless carriers to offer quadruple play to customers. Consolidation among carriers is continuing, especially in Europe where Telefonica and ADVA have announced deals recently. Carriers will need to change the business processes and in IT system to be able to offer new products and services required to compete in this changing market. These are the trends that we have been expecting, and for which we have planned.

We have focused on the large carriers who are the consolidators and who have the scale necessary to win in this market. For this customer, we have our products and services, offering to support an Integrated Customer Management strategy, allowing them to focus on their customer across product and lines of business.

We have expanded our market presence with acquisitions this quarter of DST Innovis which gave us a leading position in the broadband cable and satellite market and leading customers like Comcast and DIRECTV. Our acquisition of Longshine, in China, puts us in the great position to take advantage of the tremendous growth in this market. This strategy is bearing fruit with existing customers and providing opportunities for growth.

One example is SBC's Project Lightspeed where we are providing the systems that SBC will use to support the new IP-based services such as IPTV. SBC just announced a successful technical field trial of Lightspeed last week and said that they will begin rolling out services later this year and scaled offering in mid-2006.

We continue to work with Cingular on their convergence of AT&T Wireless subscribers and in other projects as well. We see opportunities in other geographies as well. In the current quarter we translated these opportunities into eight key wins and we disclosed a few details about some of them in our press release today. We saw a nice mix among products and geographies in the wins this quarter. We continue to work on some excellent prospects as our pipeline remains strong and diverse.

On another subject, many of you have asked us about our future with Sprint Nextel. As I said last quarter, we continue to work hard for Sprint Nextel and we leave it up to them to decide what they want to say about the plans for their system. I can say that when we prepared our revenue and earnings guidance for fiscal 2006, we considered the range of possible scenarios for this account, and we believe that we can achieve this guidance or better under any of the scenarios.

Overall, we are well-positioned for growth in 2006 and beyond. We recognize that there are challenges ahead of us as we face markets that is consolidating and undergoing dramatic change, and we are confident that our strategy is the right one for success in this market.

We are the thought leader have pioneered of concept of Integrated Customer Management which has been embraced by the industry. We have the products and services needed by the market and we are the low risk to help carriers conserve themselves, and we are the leading company in the market for our customers.

Let me now turn the call over to Ron Moskovitz for the financial review and then I will come back with some concluding remarks.

Thank you, Dov. Our fourth quarter revenue was $573.3 million, representing growth of 26.7% over last year, a sequential growth of 13%.

As expected, DST Innovis contributed approximately $51 million to revenue in the quarter. Our EPS, excluding acquisition- related costs and restructuring charges net of related tax effects was up 30% to $0.39 per diluted share. GAAP EPS was $0.32 per diluted share. Operating margins of 17% were about on plan, And down from last quarter as we integrated DST Innovis and Longshine. Our best estimate is that operating margin should grow slightly in Q1 and we expect improvements from this new baseline during fiscal 2006.

Other income was up this quarter due to higher interest rates on our investments and we expect to see about the same amount for this line in Q1. We recorded charges this quarter related to the purchase price accounting for DST Innovis, specifically charges for in process R&D and the acquisition-related costs inform total these charges were $4.5 million.

In conjunction with these acquisitions we also made some changes in our organization to align our operational structure with our growth plan. These changes resulted in a restructuring charge of $8.1 million in Q1 -- in Q4, primarily for severance costs. DSO at the end of the quarter was 48 days, down from last quarter's 53 days.

As we have predicted in earlier conference calls deferred revenue decreased this quarter in the normal course of business. We reported very good free cash flow this quarter at $105 million due in part to the decrease in DSO. Our [inaudible - accent] backlog, which includes contracts committed revenue for services contracts, letter of intent, maintenance and estimated ongoing support activities was $1.780 billion at the end of the quarter, an increase of $190 million from the June quarter.

DST Innovis has a business model incorporating strong recurrent revenue controverted $180 million of the increase in backlog this quarter. Beginning next quarter Amdocs will account for employee equity grants under the new FASB-123 R. This will require that we show an expense for the cost of employee stock options. Our best estimate is that the impact of employee equity based compensation expense on EPS will be in the range of $0.04 to $0.05 per quarter in fiscal 2006, and this is probably a good run rate to consider going forward.

Looking forward, our guidance for the first quarter of fiscal 2006 is for revenue of approximately $585 million, an EPS of $0.40, excluding employee equity based compensation expense of approximately $0.04 to $0.05 per share, and excluding the effect of acquisition related charges net of related tax effects.

Diluted GAAP EPS is expected to be approximately $0.33 to $0.34 per share. Our EPS guidance for Q1 is based on a fully diluted share count estimate of approximately 220 million shares. For full year 2000 FY 2006 our revenue is for guidance of approximately 2.4 to $2.47 billion and EPS in the range of $1.65 to $1.70. Excluding the effect of employee equity based compensation expense of approximately $0.16 to $0.20 per share and excluding the effect of acquisition-related charges net of related tax effects.

This guidance is based on a fully diluted share count estimate of approximately 225 million shares. We are projecting an effective tax rate of 18 to 20% in fiscal 2006 and for purposes of Q1 guidance we assume the midpoint. On a GAAP basis 2006 diluted EPS is expected to be approximately $1.37 to $1.44.

With that let me turn it back to Dov.

Thank you, Ron. We pleased with our results this quarter. We are looking forward to additional success in coming quarters. And with that let me open the call now to Q&A.

Thank you, sir. [OPERATOR INSTRUCTIONS]. We go first to Liz Grausam with Goldman Sachs. Go ahead, please.

This is the first time in a number of years that you actually provided full fiscal year guidance. What has changed internally from a management perspective that gives you the confidence to come out with a full year? Is there more visibility in your business than you've had historically?

Well, we try to give as much information as is practical to help the Street to understand our business. We have just finished our fiscal year and are planning for fiscal 2006. And we thought that it would be useful to share our thoughts on what we see for the next year.

And this is a range, I think you said that you feel very comfortable regardless of the outcome on one of your large outstanding clients?

Yes, what I said before and we feel that it covers the range of scenarios that are possible regarding Sprint Nextel. So no matter what happens this range covers all the alternatives.

On the R&D expense in the quarter, Ron, it was a little bit higher than we had expected. Is that an expense line that you think you guys can ratchet down over the course of the next few quarters as you go through the integration of DST?

We have integration planned enrollment for the convergence of the platforms and we expect I would say similar run rate in the coming quarters and maybe a decrease further down the road.

And then the services gross margin was actually quite a bit higher than we expected improving from the June quarter. Was that due to a higher services margin in DST or have you seen improvements in some of your managed services contracts in the wireline and wireless side?

It's a combination of different cost structure of DST plus some improvement in the core business of Amdocs.

Thanks, guys.

Liz, I just wanted to add to your point on the R&D. We are in a unique position with acquisition of DST Innovis to accelerate the offering of Amdocs ICM to the cable and broadband industry and we are in the midst of converging the products. We see a great response from the market with this offering. That's a good indication for our strategy. We expected actually the market to respond positively, but we are glad to have this opportunity and you will see as part of it you will see the R&D line. Over time obviously it will go down as we converge all this product into one.

Okay. Just lastly on the backlog, it looks like it only ticked up about $10 million organically. Is that a seasonal aspect that the September quarter tends to be slower for new signings?

It is -- I don't know if it is seasonally but the nature of the backlog that we have some fluctuations that are resulting from moving of one deal from one quarter to the other and vice versa. So overall we see a positive things in our existing business with our customers and we feel comfortable with the backlog.

Okay. Thank you.

Thank you.

We will go next to Marianne Wolk with Susquehanna, and going forward we ask that you please limit yourself to one question with one follow up and rejoin the queue if you have further questions. Marianne, please go ahead.

You announced some pretty large sounding wins in particular the large contract you announced in Europe. I was wondering if the full value was added to backlog this quarter or whether that should be added over time as you move through various phases of the project? And then secondly last, in fiscal '04 Nextel represented about 14% of revenues according to the 10-K. What was it in fiscal '05? Thanks.

For the first question, it is the service deal. I would say a great deal of that is in the backlog although these stretches are for more than 12 months. So some of it is still not in the backlog. Could you repeat the second question?

Sure. In your 10-K) for fiscal '04 Nextel was recorded as approximately 14% of revenues. What was that in fiscal '05?

We are not disclosing this number at this point.

I guess we will all wait and see it soon. Thank you.

We go next to Michael Turits, with Prudential Equity Group. Please go ahead, sir.

Hi, guys. Regarding the bottom end of the guidance for revenue for fiscal '06 it's pretty much in line with consensus and at the top end pretty significantly above it. So, and as you said that includes various scenarios for what happened at Sprint. Should we understand, why would it be that if you did lose Sprint that it would be seemingly neutral to our expectations?

Michael, this is Dov. What we intended to convey in our projection and what we feel that the low range will cover the possibilities of the other results of Sprint and Nextel and I can tell you that if in 2006 there would not be a huge impact because it takes time to convert the subscriber from one system to another. So we do not see a substantial adverse impact in 2006.

Can you give me some idea of what you think the impact might be in the second year of a conversion?

I would say that we are more focused on the positive alternatives and we have some ideas, of course we have some difficulties to share it right now. And regarding the adverse alternatives, where we don't know. What we know is that given the growth of the Company overall, we feel comfortable that no matter what would be the outcome we would continue to grow the Company.

Michael I just want to reiterate that we strongly believe that we have the best offering in the marketplace, developer position Amdocs have both in the functionality and the scalability. We just finished benchmark with HP on 65 million subscribers on the system, so we can tomorrow morning start converting customers and the system will hold.

From functionality standpoint, from scalability, from the richness and from the risk factors. We are basically wrote the book on converting companies that are going through consolidation. So we hope that the outcome would be positive. As Dov said, we are focusing on that and by the way we are also focusing on '06. We just started '06 right now so it's too early to the talk about '07.

Thanks very much, guys.

We go next to Tom Roderick with Thomas Weisel Partners. Go ahead, sir.

Good afternoon. Thank you. Just looking at the software license line this quarter, just down sequentially a little bit, what sort of guidance can you offer us in terms of how we should think about that license line going forward?

License fluctuates depending on number of, and status of implementation and process at any point in time. Our best estimate today that license revenue would continue to increase during fiscal 2006, though on a quarter by quarter basis it could fluctuate.

Fair enough. Now, you talked about the SBC Lightspeed deal. Can you share with us what else you are seeing in the IPTV pipeline both in North America and in other geographies as well? Thank you.

We see a lot of interest in the transformation of carriers from the voice era to IP broadband. So when we work overseas, not only in North America, in Europe and in other continents and in North America, most of the carriers are moving with very slow paces, some faster than the others, are moving towards a new paradigm where they will consolidate, where they will converge and where they will be aligned around the customer to offer IP broadband services including IPTV. IPTV is going to be one of the most important services.

Our experience with Lightspeed gives us a substantial advantage in this market and a lot of credibility. Now we are Integrated Customer Management offering including the platform that we have, the Amdocs 6, that provides pre-integrated front end and back end and services with CRM, building, mediation, partner relationship management, Amdocs, and with all of that and they bring us to manage the content for our carriers and they begin to move from voice providers to providers of content and various IP-based services.

So we see a trend in the market. We feel that we are, can be the enabler for this carrier to move it to this new paradigm and the IPTV is I would say a main catalyst in this activity.

Okay. Great. Last question for you, just building on the Sprint Nextel question, can you offer us a sense of timing in terms of when you think the decision will be made and when you think the investor population can hear more about this?

I believe that we will be happy to share with you the information as soon as we have it but we can not give any estimate. When we are allowed to do it. You should assume that they want to go on with their business. They have consolidating two companies. In order to win their market share. So we imagine it would be some time in the near future, not in the far future.

Okay. Thank you.

Thank you.

We move next to Sterling Auty with JPMorgan. Go ahead, please.

Thanks. Two questions. First, can you give us a sense in the '06 guidance what the contribution from DST, is it basically what you told us the increase was in backlog?

And then you mentioned kind of the cable companies that are doing quadruple play, obviously some of them doing it with Sprint. Would it be your sense that whatever billing platform that Sprint goes with that they would extend it to the quadruple play as well?

Okay. The contribution of DST, we said that we are going to the first couple of quarter contribution of between 50 to $55 million. Going forward basically we are, the result of the integration we are going to reorganize the business in a way that we are going to sell in different geographies. It is going to be mixed with some offering of some other divisions of Amdocs. So practically we are not going to discuss this number. We won't be able to discuss this number.

Regarding the other question, the quadruple play or the lines between the cable companies and Sprint Nextel, we consider it a great opportunity. First of all I would say it's according to our anticipation. We feel that we bought DST Innovis right on time when the consolidation of the industry and the convergence is accelerating.

So our presence in Comcast where we provide about half of the services to half of the subscribers of Comcast and to Cablevision and to some of the Time Warner subscribers, and the fact that we are competing on the Sprint business, gives us the opportunity to enable the industry later on to be able to move to the new paradigm of Integrated Customer Management where they serve to the same customer video, voice, data, wireless.

And by the way one of the customers that we have that we don't talk a lot about is [Wordjov] in Canada where we provide some of the services for the wireless activity and some others and it's also an interesting customer and that who adopted the policy of converging its wireless activity, cable activity and wireline activity. So we feel that we have good offering to this industry at the time when they are consolidating.

Let me just add that I think the most objective, the only company that has one system that can support wireline, wireless, cable, satellite, ISP and anything else regarding communication is Amdocs with our Amdocs 6 ICM offering and as more carriers are moving into more coherent bundling, cannot just electronic stapling, it would be more crucial for them to have integrated systems to offer appropriate banding. So we feel comfortable that we invested our money in the right direction.

Great. Thank you.

We go next to Thomas Ernst with Deutsche Bank. Go ahead, please.

Now that you had DST and had a chance to look at them under the covers do you see any near term potential risk of customer attrition? And conversely do you see any tangible share gain opportunities you look forward to pipeline opportunities in that business?

Thomas, thanks for the question. We actually did not find any surprises with DST Innovis in any aspect. Technology, people or potential customer attrition. We think that the combined offering, that the offering, that we offer to the market is having very positive resonance and in terms of potential we do have in our pipeline some prospects that we would consider to be significant prospects for our offering in the cable and satellite space.

I would like to add that now we feel even better regarding this acquisition in comparison to what we felt before buying. We think that the industry is moving in a faster pace towards the consolidation and the need for new infrastructure to support the quadruple play of the cable industry is now more urgent than before. And we think that we can benefit from that.

Guys, both of you have talked about the value of incumbency at the broadband operators, do you think that your competition has significantly answered the question of next-generation technology for their customers and their next-generation platforms they've rolled out to the carriers or do you think that largely the broadband market is still on legacy technology?

Well, in short we think we have the best offering in the market. We can not relate to what our competitors have done or did not do. We invest more than anyone else in R&D and in packaging our products and in our services and our consulting services. So and we believe that we have the best offering for this market.

Thank you.

We go next to Julie Santoriello with Morgan Stanley.

Could you talk more about integration plans for DST? When do you think that the integration will be complete? How much might it cost and when will you be prepared to go to market with this new product if you haven't already?

Julie, I would say that it's actually started already. We are making this offering as we speak to some new customers and to the existing customers obviously we have to go slower by the nature of avoiding interruption to their current business. So it's always more difficult to go to new generation of products when you have many customers on your previous system. But these plans will probably last more than a year and it is only in our plans, in our numbers of the R&D and other aspect of our plans.

And we believe it will suit the needs of our customers. And after talking to the customer and understanding the needs of the industry.

Would you be able to quantify the kind of impact that it's having on your fiscal '06 outlook?

It's very difficult to get into detail because as we said the big advantage of Amdocs in comparison to other players in the industry that we have one platform. That one platform that serves the wireless, that serves the wireline, that serves data and now this one platform will serve the cable. So what we do now, we incorporate in our 2006 plan some specific needs of the cable and satellite industry.

So some of them are needed anyhow for the telecom and for the data industry, some of them are new, so some of them are accelerations. So to measure the impact is very difficult because maybe we added one feature, we changed a little bit priority. So I would say it's very difficult and all the impact is included in the guidance that we provided for the year.

Thanks. A related question follow up for Ron, Ron, are you still on track I think to reach operating margins of 20% exiting fiscal '06?

Yes, on the core business, though, as Dov alluded to in the discussion in the context of the R&D, we are basically going to have one unit of R&D handling one platform so for us from now on it's difficult to discuss the core business versus versus the businesses because everything is going to be integrated. As we see it now we are on track and we see that we can get there.

We will go next to Julian Bu with Lehman Brothers. Please go ahead.

Dov, mentioned in the beginning pipeline remained strong. I wanted to ask you whether you can quantify that relative to say the past few quarters, is the pipeline increasing, decreasing or holding steady?

Well, we feel that the pipeline that we have right now is strong and I think it's, we are quite encouraged by the size of the pipeline. We have some increase in the pipeline and that's what we try to explain each quarter, the pipeline includes a lot of elements that some of them it's, it might be very large and then the question of probability and when they are going to realize, maybe later and earlier, all-in-all, we feel very good with the pipeline.

We have some large prospects in those geographies, in the whole transformation of a wireline carrier, full time formation of wireless carriers, in outsourcing and many others. So we feel good about the status of the pipeline.

Related to that, the backlog, the net increase of [$10 million], that's small even by your standard, you have to be expecting either an increase at some point, does that make sense?

I would refer to it, in the last couple of years our growth was characterized by some small deals but mainly a few large deals which the inclusion of them in the backlog is a result of when we close them. So as for now we feel very good about seeing in the pipeline a few large deals and we don't expect to see the, these kind of growth in the backlog every quarter. But still we feel very comfortable with the pipeline that we will provide the growth in the backlog in the coming quarters, not necessarily every quarter.

Or maybe to summarize it, we see fluctuation in the growth of the backlog. So some quarters it's better, some quarters we have and some of the customers are large some of them are small so this quarter it was most of the growth in the backlog was from the DST Innovis, which also was a real contribution to our backlog of about $180 million.

Next question for Ron, interest income, there's an increase, I about guess despite the use of cash for the acquisition, why is there such a jump?

We see an improvement in interest income as a result of the recent increase of the Fed fund rate and we expect seeing a similar level of interest income in the coming quarters as well. So -- and in one quarter versus the other we might see some fluctuations in this line item but overall we see significant increase in interest income.

Thanks a lot.

With go next to Ashwin Shirvaikar with Citigroup. Go ahead, sir.

On Sprint Nextel, if you win Sprint Nextel with I'm assuming some measure of a pricing discount, what are some of the things you can do to offset the impact of that lower pricing? To what extent does things like higher volume and, in your base services, play a role?

I don't think we can refer specifically to what is going on and what we will do in Sprint Nextel. As we said earlier all the scenarios that it might be are included in our guidance for the year. We are doing a lot of activities in order to improve our profitability in general, like the expansion of our facility in India and improving our delivery activities and many other initiatives that will help us to support the improvement of the profitability in the coming quarter and through 2006 and further.

And if of course if we win the Sprint Nextel deal, it will provide more opportunities given the fact that it's a growing customer and given the size of the activity there is room, a lot of room to do better regarding efficiency. And let me just remind you that in the last quarter the EPS grew 30% in comparison to last year. So we were successful in growing the EPS in the last two years I would say significantly and in the last quarter. So we believe that our focus on profitability and winning more business will continue to bring results to the shareholders.

Great. I have a couple of clarifications. Dov, you did say guidance or better regardless of Sprint deal. You did say guidance or better.

Well, actually --

Do we look at the guidance as sort of a lower end of what you are saying, what you can achieve?

Well, actually we provided a range of revenue and EPS. So if we will do well we will do the upper ends. If we will not do so well we will do the lower end. And do the lower end. And so that's why we gave a range and we believe that if we are successful we can do -- we will be closer to the upper end.

And as Dov said in the guidance we included the most likely events. There are some additional services that we believe that will be natural extension and they are under very good considerations or concerns we can probably do the upper ends or maybe slightly better than the upper end.

And second clarification was really on the restructuring charge. Is there ongoing benefit, future benefits on that charge?

Yes, to some extent, yes. We are doing the charge -- there are several elements of the charge. About half of it, some of it is in the context of the acquisition. This was discussed in the previous, in the previous quarter when we announced the deal.

And the other part of it is part of the reorganizational restructuring that will enable us to function more efficiently in many fronts of the Company. So the benefits are going to be direct in the expense line and some indirect in our ability to be more efficient in the delivery and more effective in the, in our selling.

Okay. Thank you.

Thank you.

We go next to Daniel Meron with RBC Investment Bank. Go ahead please.

Thank you and congratulations on the continued execution. A couple of questions here. First one, Ron, maybe you can elaborate on the deferred revenue. It was I think the second consecutive quarter that it was down since the peak in the March quarter. Is it part of the normal course of business or is there anything behind it?

This is a part of the normal course of business. If you may recall back in 2004 we had some, a huge jump of deferred revenue from $180 million to about $250 million. That was because of several contracts where which were prepaid and basically we are recognizing the revenue in the recent quarters and that is translating to this kind of reduction in deferred revenue. If you may recall we discussed in the previous quarter that this is expected.

And what would you expect that in the next couple of quarters?

It's hard to say. It might fluctuate, it might be slightly down but this is not -- this is a line item that is more difficult to project.

Thanks, Ron. And then any changes on the competitive landscape following the acquisition of CSG. and CSG. effectively moving out of the wireless wireline billing space, any other changes within the landscape?

In terms of the landscape in the last year we have seen a dramatic change in the landscape altogether. If I would mention companies like Portal and Convergis and their performance Seaville and PeopleSoft that have been sold, and so there is a lot of dynamics in this market all of the above work to our advantage and our position has strengthened dramatically in the last year.

Now we have a new competitor in a way so once they finalize this acquisition to Converse and what used to be Keenan but these, the Keenan asset is not new to us. We've been competing with them successfully in the past. Hopefully we will continue this -- we still strongly believe that we have the best proposition in the industry. Peer component, that is to say CRM, billing, and mediation and definitely a unique proposition, we talk about much of our Integrated Customer Management proposition.

Thank you.

We go next to Shaul Eyal with CIBC World Markets. Go ahead, sir.

Thank you, hi, good afternoon. On the heels of the previous question, on the converged billing what can you share with us, what do you see out there in the market, are you kind of, are your big customers coming to you converged billing opportunities?

Convergence is part of the thing that we predicted more than two years ago that would be part of the industry tradition, or industry trends. Prepaid and postpaid converted is something that we support today. We see a requirement on this regard that I would not say it's everybody has the same view of it.

Some carriers see it as a more available thing, some other carriers want to keep the prepaid and the postpaid separately. But I would say all together when you look at the trends in the market in terms of consolidation, in terms of bundling, in terms of convergence of different things, voice and data, prepaid and postpaid and any other aspects I would say that we are fairly confident that what we predicted a year and two years ago and where we invested our money ahead of time is paying off in a big way for us.

Because we basically see that there is a match between our offering both in the products and services and the needs of the industry. And prepaid, postpaid, is just one example.

Ron, what was the headcount by the ends of the quarter?

It was about 12,000 IT professionals, obviously including the addition from DST Innovis and Longshine.

Fair enough. Thank you very much and good luck.

Okay. This is Tom again. On behalf of the company that you all for joining the call today. Good day.

That does conclude today's conference call. We appreciate your participation. You may now disconnect your lines. Have a nice day.