SAP Is Said to Explore Sale of Mobile Network Software Unit

Liana Baker

15 Apr 2020, 04:24 PM IST

(Bloomberg) -- SAP SE, Europe’s biggest tech company by market value, is exploring the sale of a unit that helps telecommunications operators route calls and text messages, people with knowledge of the matter said.

The German firm is working with an adviser to gauge interest in the business and has been speaking to potential buyers, said the people, who asked not to be identified because the matter is private.

SAP’s digital interconnect business makes software that allows customers to communicate via phone or text on different carrier networks and processes related payments. The division traces its roots back to a company called Mobile 365 Inc., which Sybase Inc. acquired in 2006 for more than $400 million. It became part of SAP when the company bought Sybase in 2010.

The business generates up to $50 million in annual earnings before interest, taxes, depreciation and amortization and about $250 million in revenue, the people said. It could fetch several hundred million dollars in a sale, they added.

Some large technology companies including Microsoft Corp. and Intel Corp. have moved ahead with smaller deals despite the sharp downturn in activity due to the coronavirus pandemic.

No final decisions have been made, and SAP could still decide to keep the business, the people said. A spokesman for SAP declined to comment.

Divesting the legacy business would be in line with SAP’s strategy to focus on growing its cloud products and integrating splashy acquisitions like Qualtrics International Inc., an $8 billion deal completed last year that was its largest ever.

New co-chief executive officers, Christian Klein and Jennifer Morgan, must find ways to compete with younger companies like Salesforce.com Inc. and Workday Inc. given SAP’s roots as a traditional enterprise software business. Bill McDermott, who stepped down as CEO in October, now leads ServiceNow Inc., a competitor in enterprise software.

SAP has declined about 6% this year, valuing the Walldorf-based company at 139 billion euros ($152 billion). Shares were up Tuesday about 4%, outpacing Stoxx Europe 600 which rose 1.5%.