Another managed services-related acquisition surfaced this week. The latest deal: Birch Communications, an IP telecommunications and managed services provider (MSP) for SMBs, acquired all U.S. competitive local exchange carrier (CLEC) assets of Cordia Communications Corp., which includes My Tel Co, Inc. and Northstar Telecom Inc.
The Cordia acquisition is still pending approval from the FCC and state regulatory authority. If all goes well, Birch’s acquisition of Cordia should be finalized during the early fourth quarter of 2011. Birch, based in Atlanta, Ga., would bring on 55 new business clients and residential and broadband access lines that span 24 states through the acquisition. In a prepared statement, Birch Communications President and CEO Vincent Oddo called the deal a “tuck-in” synergistic acquisition.
Acquisitions have become the norm for Birch. The company has acquired 12 different companies within the last five years. The acquisitions have expanded Birch’s service range from its Georgia headquarters to 38 states. The Cordia deal stands out because Birch plans to bring previously outsourced jobs back into the Untied States. Birch will create a total of 50 new U.S. jobs in its Macon, Ga. and Emporium, Kan. data centers, the company predicts.
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Posted In: Acquisitions | Managed Services | Mergers & Acquisions | North America | SMB Technology
Tags: Birch Communications | Cordia Communications Corporation | Inc. | Managed Service Provider | My Tel Co | Northstar Telecom Inc. | Vincent Oddo
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This was more of a legacy telecom-to-legacy telecom transaction, not really a core managed services deal. Cordia’s product set consisted of old style local and LD, prepaid calling, and a small amount of VoIP. Most of its 55K customer accounts were residential, and the vast majority of those customers were purchasing traditional CLEC local/LD services from Cordia. So, part of the impetus for this deal was to tuck the acquired customers into Birch’s existing telecom network.
It’s hard to tell just how much managed services upsell opportunity there will be for Birch because can’t get a good measure on number of business subs. It’s clear, however, that this deal was pretty much about Cordia finally finding a buyer out of bankruptcy + Birch deriving incremental telecom revenue and cash flow to be thrown off by layering a good number of new customers onto existing operations and network.
Check out recent article about the strategic rationale behind this recent telecom-MSP deal (TDS Telecom-OneNeck IT) http://www.clearpathbankers.com/?p=209.
RAB: Thank you for the deeper dive. The nitty-gritty details you offered up, assuming they are correct, adds some interesting perspective to the deal.
-jp