Alteva, the Philadelphia-based provider of hosted VoIP and unified communications services, has announced the signing of an agreement that will see the company merge with Warwick Valley Telephone Company (WVT), a New York based ILEC (incumbent local exchange carrier) that was established in 1908.
The acquisition is expected to close in the third quarter of this year, and following the closing, Alteva will integrate its operations with WVT's CLEC (competitive local exchange carrier) businesss unit, USA Datanet.
Actually, according to Alteva's chief sales officer, Louis Hayner, the deal will be a kind of "reverse acquisition," in that the executive teams of the two organization will be integrated and will jointly run the merged operation.
What USA Datanet brings to the party, according to Hayner is two-fold. First, WVT has a hefty cash income from its relationship with Verizion Wireless. Second, USA Datanet has an efficient platform for hosting IP communications services on a smaller scale than Alteva was built to do.
Though USA Datanet "was somewhat successful, it didn't bring the kind of success they were looking for," Hayner told Enterprise VoIPplanet. "Frankly they didn't have the established channel like we did. So our job is to help them get up to speed from a sales and marketing perspective.
"They were very strong operationally," Hayner said. "They had a lot of resources in customer service. It was almost like a hand and glovewhere our big strength is in marketing and PR, the innovation side."
According to Hayner, Alteva has not had much success at going 'down-market.' "We were very effective in the 50-user space and above. One of the benefits of having USA Datanet is that's really where their products suite is compellingthe 25, 35, 50 user space and below." The nature of USA Datanet's platform will allow the combined entity to compete, in a very cost-competitive way, in a multitude of markets, he said.
"In completing the acquisition of Alteva, we will have executed on the implementation of three key strategies for WVT," said WVT CEO Duane Albro in a statement, "namely strengthening our CLEC platform, leveraging our legacy ILEC business to enhance our competitive position, and improving upon our financial performance by scaling and growing our overall operations. Furthermore, beyond the initial impact from the cash flow accretive acquisition of Alteva, WVT will be well positioned for future growth in its revenues, profitability and market share in one of the communications industrys fastest growing segments.
"Finally, the anticipated synergies and complementary attributes of the combined CLEC businesses will provide cost saving and operational benefits. Alteva brings a superior sales and marketing channel with direct and agent sales maintaining national coverage, while USA Datanet has a more extensive family of products and a robust network replete with local and national connectivity, a global backbone, and full network operation and support centers," Albro concluded.
Not only will the operations and executive teams of the two organizations be intermingled, so will the sales team. "We're going to integrate end-lead flow among sales teams," Hayner explained. "So our sales team will be a special operations unit going between the different entities, teaching them how to sell to the enterprise, supporting when necessary, and we can contribute to the USA Datanet pool of leads when we run across a smaller organization that is being fed through the channel."
So, the combination of a steady cash flow to fund future acquisitions with a strong channel, superior sales and marketing acumen, and an efficient platform for dispensing cost-effective hosted communications services could turn out to be the start of something very big indeed.