Mergers, Acquisitions and Moves

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Mergers, Acquisitions and Moves

There has been a lot of activity in the last couple of weeks in the telecom sector. Here are the highlights.

Verizon decided to put its Enterprise business up for sale for $10B. Rumor has it that the data center business (formerly known as Terremark) has been up for sale for a while. Fortune is reporting that the $10B gets you Terremark and MCI. This makes VZ look more like Windstream. Yet with $118B in debt, you have to start thinking about paying some of it down. Seeking Alpha worries about VZ's future. The $495mill that IOT pulled in does not move the needle against the debt.

Let's not forget that Sprint has a wireline business just flapping in the breeze that they would like to monetize with a sale as well. Just the price may be too high -- as the case with a $10B price tag on MCI-Terremark.

In an unexpected move,Impact Telecom and TNCI have merged. Earlier this year, TNCI had told me to watch out for a re-branding effort after a debacle couple of years for the former rebiller (that sued agents). I didn't see the new brand; maybe this is it. " The newly formed organization, under the brand Impact Telecom, will provide innovative cloud and voice telecommunications solutions to businesses and consumers in the United States and Canada and wholesale carrier customers around the world." In other words, we will sell everything we can to anyone we can in North America. Please make checks payable to Impact Telecom. I will say that the strategy of the combined company continues the TNCI strategy.

Both companies are a mash-up of CLECs. "Blue Casa bought the TNCI business back in 2013 after it emerged from Chapter 11, and soon thereafter bought Pac-West to go with it. Meanwhile, also in 2013, Impact Telecom acquired Matrix, which itself had acquired Excel, Trinsic, and the SMB business of Global Crossing." [Ramblings] I guess it resembles a Birch playbook.

One company that does have a plan is GTT. "The year-over-year increases in revenue, gross margin, adjusted EBITDA and unlevered free cash flow are due primarily to the acquisitions of UNSi on October 1, 2014 and MegaPath's managed services business on April 1, 2015...On October 22, 2015, subsequent to quarter-end, GTT completed the acquisition of One Source Networks (OSN), a provider of global data, Internet, Session Initiation Protocol (SIP) trunking and managed services to Fortune 1000 companies. GTT paid $175 million for OSN...," according to GTT report.

"Having achieved our previously announced financial objectives of $400 million in revenue and $100 million in Adjusted EBITDA, I am pleased to announce that [GTThas] established our next set of financial objectives to reach $1 billion in revenue and $250 million in Adjusted EBITDA within the next five years." It's possible, but hitting a billion has not helped any CLEC - ask Intermendia or Paetec.

Jive bought Easy Office Phone. EOP is based in Ontario Canada - and Jive will use that as its base for Canadian operations. Jive gets a little help in portal and call center from this acquisition.

This is the second Canadian Hosted VoIP announcement. Shaw - a large MSO in Canada - rolled out a Broadsoft service last month. Canada's Hosted PBX space is getting as crowded as the USA.

ShoreTel bought another M5. In 2012, ShoreTel bought NYC based M5 Networks. This past week, "ShoreTel has snapped up Australian hosted VoIP specialist M5 Networks" in order to accelerate their go-to-market Down Under.

"Last week, the FCC proposed a $718,000 fine against M.C. Dean, the company that provides Internet services at the Baltimore Convention Center, over accusations that the company blocked Wi-Fi hot spots, as well as a $25,000 fine against Hilton Worldwide Holdings for what the agency called "apparent obstruction of an investigation" into Wi-Fi blocking." [NYT]

RingCentral had a good quarter. "The business had revenue of $76.80 million for the quarter, compared to analysts' expectations of $74.73 million. The business's revenue was up 35.0% on a year-over-year basis."

In Texas and Oklahoma, "LOGIX Communications has agreed to be acquired by an investor group led by Astra Capital Management," according to TelecomRamblings. Rumor has it that Alpheus will be next, maybe by the same PE firm.

Final note: Hargray, an indie telco in SC, bought an indie cableco in Georgia. Consolidation is everywhere.

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