HCLTech has announced a new acquisition aimed at strengthening its telecom and network capabilities, but analysts remain cautious about the financial impact and valuation comfort.
On December 18, HCLTech Ltd said it has signed an agreement to acquire the telco solutions business of Hewlett Packard Enterprise to enhance its engineering strength and AI-led network offerings for global communication service providers. The deal builds on an earlier transaction completed in 2024, when HCLTech acquired select assets from HPE’s Communications Technology Group.
Through this acquisition, HCLTech will gain access to industry intellectual property, product engineering and R&D talent, and long standing client relationships with leading global CSPs. The telco solutions business currently supports more than 1 billion devices across over 200 deployments worldwide. Its portfolio includes operations support systems, home subscriber server platforms, 5G subscriber data management, and AI-led closed-loop network automation.
As part of the transaction, nearly 1,500 engineering and telecom specialists from 39 countries will join HCLTech’s global delivery team. The acquisition is structured as an asset carve-out and does not involve any share purchase. The entire consideration will be paid in cash.
The total deal value is up to $160 million, including $15 million linked to performance incentives for FY25. The transaction remains subject to regulatory approvals across multiple countries, including clearance from the Committee on Foreign Investment in the United States, and is expected to close within about 6 months from signing.
HCLTech said it plans to use the expanded engineering capabilities and acquired intellectual property to accelerate 5G transformation, network cloudification, network as a service, autonomous networking, service management and orchestration, AI-led network automation, and AI-native networks for global CSPs.
Despite the strategic intent, brokerage firm Kotak Institutional Equities has maintained its “reduce” rating on HCLTech with a price target of ₹1,500. The firm said HCLTech continues to focus on value based acquisitions. In the absence of disclosed financials, Kotak estimates the deal cost at around 1 percent of HCLTech’s projected revenue for the current financial year. At 23.5 times FY27 estimated price to earnings, the brokerage finds the stock expensive.
Morgan Stanley has also retained its “equal-weight” rating with a price target of ₹1,680, noting that the acquisition is unlikely to have a meaningful financial impact.
Overall, 47 analysts track HCLTech, with 25 recommending “buy”, 14 suggesting “hold”, and 8 maintaining a “sell” view.
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