"Its a typical situation in these typical times..." Dave Matthews Band
It seems that ISP roll-ups just don't last long. Volaris anyone? This story has a Tampa flavor, since KeyOn Communications Holdings Inc., acquired Broadsoft's second customer ever, CommX, in June of 2011 (last year).
"On June 14, 2011, KeyOn announced that it acquired a BroadSoft, Inc.-based VoIP business with its purchase of entities doing business as CommX. The strategic acquisition of CommX provides KeyOn with a vertically integrated platform to upsell VoIP services to its more than 20,000 wireless broadband subscribers. It is expected that CommX will add over $3 million in annualized revenues and for the first quarter ended March 31, 2011, on a pro forma basis after giving effect to the two acquisitions completed in the quarter and CommX's results for the quarter, KeyOn would have revenues of approximately $3.4 million and a narrowed Adjusted EBITDA loss of approximately $240,000." [keyon news]
Roll-ups are never a cash deal and neither was this one. And it fell apart. lawsuits have been filed.
Keyon bought some assets of CommPartners from bankruptcy court in 2010. Keyon was put up for sale in January of 2012. "The decision to sell comes after years of acquisitions followed by a quick and steep decline in profitability, combined with frayed relations between the company's founding team and Dr. Patrick Soon-Shiong, a multibillionaire doctor and businessman," according to the Omaha World-Herald. It looks like JAB Wireless will be buying assets of Keyon Communications. Financial details of the deal were not available.
Like OpenReach, the other wireless company to BK, Keyon has a $10M - untouched -grant federal American Recovery and Reinvestment Act to build a wireless network in rural Nevada. I guess JAB gets that now.
As of Sept. 30, 2011, Keyon lost $21 million for the first nine months of the year and racked up more than $48 million in debt.
It's a mess for CommX and for Keyon customers.,p>"Telecom is an expensive business to be in."
It's not about getting bigger. It's about getting better.