Cisco to Buy Israel's Intucell for $475 Million

Start-up develops technology to help mobile communication companies operate their networks at top efficiency.

The American networking technology giant Cisco said on Wednesday that it had agreed to acquire the Israeli start-up company Intucell for $475 million.

The start-up, founded in 2008 by CEO Rani Wellingstein and Ido Susan, vice president for products, develops technology for mobile communication companies. It helps them operate their networks more efficiently to cope with the surging demand for data that has come as smartphones are more and more omnipresent.

Intucell has raised $8.5 million since its founding in new rounds of financing from investors like Israeli venture capital fund Genesis Partners and the U.S.-based fund Bessemer Partners. The company, which employs about 20 people, declined to comment on the reported sale.

Mobile data traffic on the networks of both Verizon Wireless, the largest U.S. mobile network operator by subscribers, and its rival AT&T Mobile, has been doubling every year for the past five years, accord to a recent report in The Financial Times. Wireless spectrum is in short supply and industry officials have warned that mobile data traffic will exceed capacity by 2014.

Intucell's Self Optimizing Network solution tunes a cellular operator's network to actual conditions as they develop and change, performing thousands of micro adjustments to improve the quality of video streaming and downloads.

"Through the addition of Intucell's industry-leading SON technology, Cisco's service provider mobility portfolio provides operators with unparalleled network intelligence and the unique ability to not only accommodate exploding network traffic, but to profit from it," Kelly Ahuja, senior vice president and general manager of Cisco's Service Provider Mobility Group, said in a statement.

Cisco, with sales of $46 billion in its last fiscal year, has been a serial buyer of Israeli start-ups, acquiring 10 companies since 1998 when it bought ClassData for $50 million. In 2000, at the peak of the high-tech bubble, it bought five Israeli companies, among them InfoGear for $300 million.

In 2004, it acquired three others, including P-Cube for $200 million, and in 2005, it bought Sheer Networks for $97 million. In 2012 it bought NDS Group, a maker of video software and content security solutions, from the Premira private equity fund and Rupert Murdoch's News Corporation for $5 billion.

The acquisition, whose cost includes so-called retention-based incentives to Intucell's employees, is expected to close in the third quarter of Cisco's fiscal year 2013.

Bloomberg