NPRG Insights suggests that hosted VoIP valuations are rising. I don't think so. I privvy to some info that points me to the fact that many valuations are based on not revenue, but what the investors want to cash out. Sometimes that looks good. Sometimes it doesn't.
It's not all about revenue either. It takes a significant investment in capital and human resources to put together a reliable and resilient Hosted VoIP service. (Not everyone spends the money. Lots of duct tape and we'll figure it out as we go along.)
And sometimes that revenue barely covers costs. Many of the acquisitions were Broadsoft based companies. Those come with a few strings: You need a Broadsoft expert (or two) to keep that softswitch running all the time. You need someone that really understands packet networking and another person that has actually run a voice switch. There are gotchas in both the data side and the voice side. And then there is the licensing!
There's a hiccup there, where some early BSFT customers have bigger licensing rates than those that found a secondary route to the Broadworks platform. Either way: like Microsoft there are licensing rates that need to be factored in.
You also have to figure in origination and termination volume, E-911, CNAM, LNP, and the B/OSS that keeps the order.
A final look might go into to network design. Is the data center redundant? Is there more than one upstream for VoIP and Internet? Any peering arrangements?
As an Agent, you might want to ask some of these questions.
How do they handle Quality of Service? How do they manage porting numbers? Are they a licensed CLEC (except in Florida where there is no longer such a thing.) What taxes and fees are they collecting?
I keep seeing this on twitter: Telcos invested US$8B in first half of 2011, but generated pennies. They bought instead of building. They have to figure out how to integrate it; provision it; and sell it organization-wide. good luck!
There have been a number of Cloud Communications (or Hosted PBX if you rather) mergers and moves in the last year. Now were staggering.
- Earthlink bought STS..
- TelePacific bought Telekenex
- Parallels partnered with 4spa
- Intermedia.Net rolled out hosted then sold to private equity
- Telovations did the deed with FeatureTel
- CommX was picked up by Keyon
- Cbeyond bought Aratta
- CommPartners was bought by Momentum (a fellow BSFT customer) and Point1 got the minutes.
- Smoothstone was scooped up by West, who owns Intercall (conferencing)
- M5 grabbed Geckotech.
- Windstream, TDS, Comcast, Cox and XO all offer Broadsoft based Hosted PBX/Cloud Comm on their network.