Mergers and acquisitions are the norm in business. However, it’s not every day that two major cloud communications players with highly complementary offerings join forces in 50/50 fashion. Today, GENBAND (News - Alert) and Sonus announced intentions of merging, which results in not just a coup for each company, but real time communications win big as well.
Shareholders will own 50 percent of the combined company, and, based on yesterday’s closing cost, puts the value of the combined entity at just shy of $750 million. From a technical perspective, Sonus brings security analytics and control platforms leadership to meld with GENBAND’s expertise in network modernization, UC, embedded, mobile communications solutions and – not to mention – WebRTC-based Kandy (News - Alert) services.
“We feel this is a great move for our customers, partners, employees and the industry as a whole. The combination sensibly brings together two complementary businesses and world-class teams that will be well positioned to offer even more value to our customers and partners when it comes to quickly and securely launching new Real Time Communications offerings,” GENBAND SVP of Global Marketing Bita Milanian told TMC (News - Alert) today.
Cloud communications are all the rage, but digital transformation is something easier said than done. The resulting firm can ease an enterprise or communication service provider’s all-IP or cloud migration, providing a robust real time offering and ushering in the cloud era.
Milanian continued to note, “Together, we will have greater resources across the globe to support our customers’ needs, through a broader and deeper footprint, increased ability to invest in growth, more efficient and effective R&D, and smoother migration paths to the virtualized all-IP world.”
The pairing notes three primary strategic advantages to come from the merger. The two firms possess complementary growth initiatives. For instance, Sonus’ new cloud security offering supports the real time flows and digital services spawned from Kandy CPaaS. The end product: end to end visibility and analytics providing for improved flow control as well as threat detection and mitigation. The pairing provides a path for partners or customers to get real time applications to market or launch quickly and securely.
Sonus and GENBAND possess very little product overlap – SBCs, soft switches and media gateways –creating a more complete offering (still awaiting word on what this will actually look like moving forward – GENBAND Perspectives17 this summer could be quite illuminating). The combined offering is in a strong position to provide wide-ranging solutions to enterprises and service providers moving into the digital era – network transformation has been a focus of both firms for some time.
In addition to complementary strategy and products, the merger makes for a much larger footprint and improved reach. Combined, the two companies have presence in 27 countries, where they provide services to nearly all major Tier-1 communications service providers.
Taking a step back, and big picturing telecom as an industry, this deal should come as no surprise. When seeking additional industry insight, I turned to industry analyst and veteran Doug Mohney, who broke it down quite concisely. Mohney explained, “The telecom industry is either A) Looking for mergers to strengthen position or B) Going bankrupt (See: Avaya (News - Alert)). It's all about software and services at this point.”
Don’t be shocked to see a couple more mergers and acquisitions in the not too distant future – Mohney notes the possibility of Broadsoft or MetaSwitch (News - Alert) joining the M&A fray, but only time will tell how the industry shakes out.
Jon Arnold (News - Alert), Principal of J Arnold & Associates, agrees with Mohney on the influential power of mergers, saying, “These companies have long histories, and it looks like the time is right to create a strong solution for network modernization. Carriers, in particular, need this updated infrastructure to reduce costs and accelerate innovation to keep pace with an ever-changing landscape of competition. With their deep relationships, this merger will give the combined company a stronger position to maintain leadership for the next generation of service creation and delivery.”
We live in a real time world, which demands real time applications fit to meet the fast pace of today’s business environment. The merger of GENBAND and Sonus may seem like one small step, but in fact it could be a giant leap for real time ‘round the globe.