Comms Dealer

Philip Carse, industry analyst at Megabuyte.com, reports on the recent trading performances of leading companies operating in the comms space.

UK quoted Telecoms & Networks companies have not proved immune to general stock market concerns and volatility, with one and three month declines of 7% and 16% outpacing the FTSE All Share's 3% and 6% falls over the same period. This is also a worse performance than the general Megabuyte universe of tech companies, down 3% and up 5% over the same period. This appears to have put a stop to the bull run of Telecoms & Networks companies in recent months, with a flat performance over the last year versus -7% for the FTSE All Share and +25% for the Megabuyte index.

One key driver of the poor performance in recent months has been TalkTalk, down about 35-36% over the last three and 12 months, following its well publicised security breach and the resulting £30-35m impact on FY15/16 profitability, or an approximate 10% hit.

The major sector news in the last month or so has been the CMA's approval of the BT acquisition of EE. The CMA justifies its unconditional go-ahead on the basis of very limited overlap between BT's fixed and EE's mobile activities at the retail level (has it not heard of quad play?). Regarding the wholesale impact, the CMA notes Ofcom's ongoing strategic review, thus effectively leaving any major decisions on Openreach to Ofcom. As a reminder, the deal combines the UK's two largest telecoms players, with EE's £6.4bn of annualised revenues and £1.6bn of EBITDA representing a 36% and 25% addition to BT's £18bn and £6.3bn. It would, however, almost double BT's Consumer and Business retail revenues of £7.4bn.

Another area of interest recently has been in fibre networks, with both tier 2 town and city fibre network provider CityFibre and rural broadband Gigaclear advancing their causes. CityFibre acquired KCOM's national network for £90m, funded through an £80m equity raise and new debt. The network, which CityFibre said would cost £200m to build today, significantly enhances its metropolitan footprint and gives it a new long distance network, advancing its business plan by five to seven years. Meanwhile, KCOM benefits from a substantial reduction in net debt.

Gigaclear received 25m euro in debt funding from the European Investment Bank, as part of a planned £90m funding this year, which will help fund 2016's planned 40,000-premises rollout. This comes on top of 15,000 live premises and 10,000 under construction as at the end of 2015.

In other corporate activity, Motorola Solutions is to acquire Macquarie-backed UK public safety network provider Airwave for £764m net of cash acquired. The price represents barely 3.1x EBITDA to June 2014, reflecting the wind-down of Airwave's TETRA network as the UK Government looks to 4G mobile networks for a lower cost alternative, and represents a thumping loss on Macquarie's £1.9bn 2007 acquisition. Shortly afterwards, Motorola was announced as the provider of end user services for the 4G-based public safety network, with EE gaining the network contract.

There have also been deals involving Intercity and COLT, though in opposite strategic directions. Intercity Telecom acquired Imerja, bringing IT managed services, hosting and security, adding approximately £10m revenues growing at 40% a year, and taking Intercity to about £35m revenues. In contrast, Aurelius Group-backed ICT provider Getronics announced the proposed acquisition of COLT Group's managed cloud business for an undisclosed sum, after COLT threw in the towel on its IT services business last June, baulking at the costs needed to get to profitability. This was highlighted with first half 2015 EBITDA losses of 7.7m euros on revenues down 14% at 33.3m euros.

In results news, comms and IT provider Alternative Networks announced 13% EBITDA growth to £22.1m on revenues up 9% to £146.8m for the year to September 2015 (10% and 4% organic), with the usual exemplary cash conversion. The year was a significant one in the development of Alternative Networks in terms of management, product, systems and operations, with the company's positive outlook reflecting the fact that it now generates as much revenue from managed services, hosted desktop and IT professional services as from its once core fixed voice services.

Private companies reporting results recently include contact centre specialist Sabio (revenues up 21% to £41.7m, combined with rising margins and very strong cash conversion); Wavenet (flat EBITDA on revenues up 19% to £12m, due to growth investments); and SSE Telecoms (EBITDA halved on revenues down 5% to £35m, but orders up strongly subsequently due to network and product enhancements).

Fast growing SIPHON Networks' cloud UC mission could come to dominate, according to Steve Harris, co-founder and Managing Director, who says the company's reseller engagement strategy strikes a harmonious chord with an expanding posse of channel partners.

There is no doubt that Harris's biggest career achievement is co-founding SIPHON in 2009, but how he managed this remarkable feat is still a head-scratching question. "I look back on how we did it with a £50,000 investment in the middle of a global financial crisis," recalled Harris. "Initially, we were lucky to partner with smaller companies such as BNS Telecom that were acquired and grew into larger entities. As a consequence our revenue increased alongside theirs and we could offer the same value but with additional scale. We then used our growth to fund the acquisition of VCOMM. The timing coincided with a strong upturn in cloud adoption and we could offer our cloud UC service providers a true end-to-end solution and technology enablement proposition."

Much time and effort was spent on integrating VCOMM and establishing the distribution side of the business, which is a fundamentally different operation compared to SIPHON's initial modus operandi. "The value that the acquisition created for our customers was clear, so we needed to significantly change the way we operated in terms of our internal systems and processes," added Harris. "Our customers are mainly cloud UC providers but we are working with a growing number of IT resellers who recognise that they need additional support to maximise their success when offering voice and UC services such as Skype for Business Enterprise Voice."

SIPHON has no dependency on legacy revenues or vendors therefore its focus is on two primary and disruptive cloud UC market offerings, BroadSoft and Microsoft Skype for Business (SfB). "We use an indirect channel model and will continue to work through our channel partners, enabling them to bring these disruptive technologies to their end users," stated Harris.

Having established its Microsoft Technology Practice over a year ago, SIPHON has been eyeing the SfB domain for some time now. In a significant development SIPHON recently achieved formal status as a Microsoft Gold Partner and is also leveraging Gold Communication Competency capabilities in its work with partners.

Last year SIPHON extended its BroadSoft partnership to include BroadCloud. This enables partners to consume and offer the BroadWorks solution on an opex basis rather than buying their own platform with the associated capital investment. "We are also looking at other cloud offerings to complement this proposition, so the channel should expect the launch of new services in this area during 2016," said Harris.

"We are committed to these BroadSoft and Microsoft SfB solutions and also have strong vendor partnerships with other suppliers including Oracle (Acme Packet), Polycom and AudioCodes. Ultimately, we sit between our vendor suppliers and channel partners, so these relationships shape the type of products and services that we can provide."

Another important development got under way around 18 months ago when SIPHON set about evolving its internal structure and systems to scale and support its growth ambitions. "We completed our ISO27001 certification and have invested in the automation of our internal systems, whereby we now expect to process, provision and fulfil over 70 per cent of orders automatically," added Harris. "This investment in systems and processes is key as the volume of orders we processed last year increased 125 per cent against 2014 figures."

The revenue at SIPHON has grown by 644 per cent over the last four years, earning the company 23rd place in the Deloitte UK Technology Fast 50 awards 2015. This year SIPHON will increase its headcount to 50 full-time staff and is targeting in excess of £20 million turnover by 2017. "Our main priority is to execute on the business plan we set out when we took our strategic investment last year from Finance Wales (Private Equity investor)," said Harris.
"We were above our forecasted plan last year and expect to do the same again in 2016, although we think our growth in percentage terms will be more modest. We will achieve our business goals by continuing to ensure that our offering is genuinely relevant to our partner customers as well as our continued investment in innovation."

The statistic that most interests Harris is the percentage of companies yet to adopt a cloud UC solution. "The SME and mid-market segments have seen massive growth in this area during 2015, but fewer than 10 per cent of UK SMEs have a cloud UC service," he noted. "That speaks volumes about the opportunity that exists. It's not surprising that there's considerable investment and alignment happening in this space."

Harris has a knack for putting his finger on an opportunity, and his magic touch played a big hand in the formation of SIPHON which he founded with Technical Director Rob Smith. "We saw the emergence of cloud UC, and also saw that it would be the smaller and more dynamic service providers that would quickly find success in this space," explained Harris. "But the ambitions of these companies were hampered by a lack of technical skills and integration experience, so we recognised that the circumstances were favourable to build a company that would help them to be disruptive with us working as their technology and integration partner."

SIPHON does this by adopting the same approach to all channel partners, regardless of who they are or the services they are trying to provide. "It's a strategy that works for us and is consistent across our cloud, distribution and Microsoft practices," explained Harris. "Ultimately, the partner will have some skills and ideas on what they'd like to offer, so they come to us with various requests. Our job is to plug the gaps in their skills and knowledge and add further value to their offering. Our value to them will increase if there are more gaps to fill or more sophisticated ways that they want to utilise our portfolio of products and services, whether this is to differentiate themselves from rivals or simply to provide a more comprehensive offering."

Cloud UC and its adoption will continue to be the primary driving force behind SIPHON's growth, and Harris plans to take his approach to new geographical markets, tailoring solutions to each partner depending on their requirements. The most effective partnerships involve investments in joint sales and marketing initiatives that ultimately drive success for both parties.

Harris has the astute ability to ensure that SIPHON remains ahead of the curve. This strategic foresight and clear vision could be strongly attributed to his previous work experience in comms. He joined Nortel as a work placement student while at university and took a full-time role after finishing his degree. "I spent eight years at Nortel across various roles in logistics, project management, marketing, business development and sales, which gave me a good grounding in the industry and business in general," he said. "I have my Nortel stock and options certificate on the wall in my home office. It's a stark reminder that things can change very quickly. The demise of Nortel is well documented, but it was a great place to start a career in telecoms."•

Cardiff-based TWL Voice and Data has spent the past two years getting into tip top operational condition. Here, Managing Director Andrew Nicholson discusses the fitness programme and how it has become a key component of his growth strategy.

With strategic foresight Nicholson brought in external help to get TWL's business basics right and he continues to build on the foundations that have been put in place over the past two years. He credits business advisory firm Mustard for helping to get TWL disciplined and fit for growth by installing structure, processes, systems and frameworks that put Nicholson in command of his destiny. "This gave us something we never had before, and it created a solid platform for us to grow," he said.

These processes gave TWL a clear picture of where the company was and how certain elements of the operation were performing. "Having accurate data about the performance of the business was key to us making tough, but beneficial, decisions," added Nicholson. "From sales figures to response times, there was no hiding place. It cleared up any weaknesses and helped us to develop a culture of hard work and honesty. Good people working for each other is what drives a team, not laziness and a lack of accountability. In hindsight, I would have implemented structure sooner."

Nicholson explained that TWL's proposition has been built around providing customer experience excellence in communications systems and maintenance. The company supplies Mitel, Unify, Toshiba and Oak equipment with hosted VoIP, Wi-Fi, mobile, cabling and security also in the kit bag. Nicholson's current priorities are to recruit the right talent with the right attitude and to complete the acquisitions he is targeting. "As well as organic growth we are planning for acquisitions, acquisitions and more acquisitions," he said. "In the short-term we're interested in speaking to any small to medium telecoms firm in south Wales and the south west of England."

Two important acquisitions already in the bag are Danwood Telecoms which was snapped up in 2012 in a deal that increased the customer base by 200 and pushed turnover up by £450k; and the purchase of JVH Communications in 2015 which boosted turnover by 22 per cent to £2.2 million. "These acquisitions were huge for us in terms of leaps in growth," added Nicholson.

The company now has 500 clients, 18 staff and revenues of £2.2 million with a forecast to hit £2.4 million in 2016 via organic growth alone. TWL's clients include professional rugby team Cardiff Blues, Cardiff and Vale College, Port of Milford Haven, Cardiff Metropolitan University and Welsh retailer JoJo Maman Bebe.

"We will be at £5 million turnover with 30 staff by 2018," said Nicholson. "That's not taking acquisitions into account. Growth will also be driven by two divisions in our business - data cabling and security. The security division is fairly new, but data cabling has been part of our offering for a couple of years. The latter is worth £400k per annum to us and we grew it over three years from £50k in its first year. This has been a great area of growth."

Needless to say Nicholson has a firm grasp on the market's dynamics and he is observing with interest how telecoms is converging with security. "In its basic form you're seeing mobile phones having the ability to control home appliances and utilities, and how home automation is impacting on telecoms is something that has great implications for security in general," he stated. "We are targeting the security division as a real opportunity for growth."

TWL was founded in 2000 after the south Wales company Nicholson worked for as an engineer went bust. He couldn't turn his back on customers who came knocking on his door for support and was straight back on the case with five clients on the books at launch. "The experience of being laid off and putting together TWL in such a short space of time made a lasting impression on me," he said. "Anything that has been thrown at me since I have been able to manage with a calm head under pressure."

Other key developments since TWL's foundation include the implementation of a ticketing system and CRM function. "This allows us to keep on top of any issues current clients may be experiencing, as well as helping us to manage installations and upgrades far more effectively, minimising any disruption the business may experience," said Nicholson. "Our excellence in managing installations, training and customer support leads to increased productivity for our customers, increased sales, lower costs, improved reliability, happier staff and improves the customer's brand."

But recruiting quality sales staff who are willing to go the extra mile for customers and put teamwork first is a pressing issue of significance for TWL. "We offer no hiding places, it's bred into our culture," commented Nicholson. "We need people who can work for the team, not themselves. We're in the process of bringing on graduates who are eager to learn. They have no bad habits and we can help them develop a customer-minded approach to all manner of telecoms. We don't want negative people, we want people who are positive and solve issues."•

By Elvire Gosnold, Director, Blabbermouth Marketing: Are you sticking to your New Year's resolutions? Even if you have lost interest in your lifestyle resolutions, there is still time to set a few simple action points to steer your 2016 marketing activity in the right direction.

If we all had a few marketing resolutions, 2016 would be a calmer and more fruitful year for us all. Resolutions should be easy to understand, easy to remember and easy to relay to your team. Here are a few that will keep your marketing activity focused for 2016.

Identify your USPs: It is imperative that you know what makes your business better than the rest. Marketing activity is so much more effective if you know what your strengths are.

Promote your USPs: You may know what your unique selling points are but does everyone else? Make sure your team is actively promoting your USPs and ensure the business as a whole is focusing on the same strengths.

Be social: Ensure your social media pages are up-to-date and on-brand. Set yourself and your team a goal to post on social media once a week. However, the content must be informative and professional.

Don't forget your customers: It is easy to get carried away with new client meetings so remember your loyal base. Regular and informative communication with your existing customers effectively increases cross-sell and up-sell opportunities and can dramatically reduce churn.

Update your website regularly: Your website says so much about your business. Even if visitors are on there for just a few seconds they will form an opinion on your company. Out of date offers, broken links, cheesy photos and old logos all give a poor impression.

Global 4 Communications has secured a trip to Japan courtesy of NEC following the completion of the largest installation in EMEA of the vendor's cloud based UC&C solution UNIVERGE 3C with 2,000 extensions deployed.

Key figures in the Global 4 team have won a five day trip to Tokyo to visit NEC's international HQ and other landmarks.

Global 4 aims to install a further 6,000 3C extensions in the coming 12 months.

The reseller has been an NEC Premier Partner for 18 years and won NEC's Best Reseller in EMEA three times in the last five years.

Global 4 MD Nigel Barnett said: "We are number one through a mix of hard work, service and prices, knowing the market and the NEC solutions we sell."

Jola Cloud Solutions has opened a new office in Stapleford, Nottinghamshire, to house its growing provisioning and support departments.

Andrew Dickinson, Managing Director, said: "We now have over 100 partners to support and it is important to make sure that we recruit an experienced and effective team to retain responsiveness and satisfaction targets.

"This new Midlands office is a great milestone for us, with space for more new staff as we grow."

Adrian Sunderland, Operations Director, added: "We have developed software to manage as many processes as possible and this is saving time and money for Jola and our partner base.

"Of course not everything can be automated and we are always looking for experienced staff to join us as the business continues to expand."

Alert Logic, a US-based provider of Security-as-a-Service solutions for the cloud, has won a £572,000 grant from Invest Northern Ireland in support of its security research and technology development centre located in Belfast.

This will enable the continued growth of its Belfast office in Northern Ireland by supporting approximately 90 jobs, says the firm.

Alert Logic opened an office in London in 2013 and a Security Operations Center (SOC) in Cardiff in 2015.

"European companies are moving to the cloud in record numbers and they realise that security solutions built in the cloud, specifically for the cloud, coupled with 24x7 managed services, is the way to keep their sensitive data safe and secure," said Gray Hall, CEO of Alert Logic.

"We continue to expand our European presence and provide Security-as-a-Service solutions for EMEA business customers."

Alert Logic's Belfast office is a security research and technology development centre, staffing employees in a variety of functions including threat intelligence, analytics and engineering. 

"Cyber security and cloud security are two of the fastest growing sectors in the market and the highly educated, technical workforce in Belfast will help Alert Logic continue its rapid global growth," said Finance Minister Mervyn Storey.

"This support will help create high quality jobs for the future and will further contribute to the dynamic, growing economy of Northern Ireland."

Ericsson-LG distributor Pragma unveiled iPECS Cloud to partners during its annual conference held at Whittlebury Hall near Silverstone on February 4th. The launch comes at a time when Ericsson-LG's confidence in the UK market has soared to a ten year high.

The Pragma-Ericsson-LG partnership is paying dividends with a 30% rise in sales of on-premise systems last year and significant advances made into the mid-market and larger enterprise space; and in a show of bullish ambition the vendor is eyeing third place in the UK vendor league having moved up to fifth position in MZA's latest market report.

Will Morey, Director and co-founder of Pragma, stated: "Cloud evangelists say that the PBX is dead and cloud is the only option. We all know that isn't true.

"But cloud is showing healthy growth and our partners expect an increasing proportion of their customer base to move to the cloud over the next few years.

"So we've made significant investments in taking iPECS-CM and turning the product into a fully virtualised feature rich and reseller friendly cloud platform."

iPECS Cloud has four engagements models: Dealer, reseller, VSP and full service provider. Everything is wrapped into a portal with four levels of access.

Ericsson-LG has a clear roadmap to develop new features, functionality and capabilities for iPECS Cloud with version two planned for release in May, version three in September and another next year.

"Every step of the way Ericsson-LG ensured that iPECS Cloud upholds a reseller-centric business model with a strong commercial proposition, simple deployment and bundles for leasing propositions," added Morey.

"Proprietary and feature rich functionality is also key. All on-premise kit is cloud-ready, so customers can move to the cloud 'as and when', and partners can build up these future upgrade opportunities."

Pragma partner Lily Comms MD Chris Morrisey welcomed news of Ericsson-LG's progress. "With the launch of iPECS Cloud we are able to offer our prospective and current clients a choice of on-premise, hybrid or cloud communication systems without sacrificing features, all under the Ericsson-LG brand," he stated.

"No longer is Ericsson-LG a telephony manufacturer, it is a communications provider focused on applications and software in addition to the base proposition which is telephony.

"This aligns with how we are positioning ourselves in the market, not as a telephony provider, but a communication solutions specialist."

Azlan has appointed Mark Robinson as Marketing Manager for its Enterprise Software and Technology and Services practices.

He joins from Microsoft where he spent 18 months as part of the OEM Partner Marketing team.

Previous roles include stints a HP in PC systems marketing and prior to that two years at channel marketing agency Outbound.

Sara Gemmell, Azlan UK Marketing Director, said: "We are placing more focused investment on solutions marketing and taking a progressive approach with partners, helping them to promote their capabilities and generate qualified end user leads.

"Mark is a valuable addition to our team and will be working closely with vendors and resellers to provide the focus and support needed to deliver positive results."

Since 2000 when the first camera phone was introduced the number of mobile users has quintupled.

By 2020, there will be 5.5 billion mobile users, representing 70% of the global population, according to the release of the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast (2015 to 2020).

The adoption of mobile devices, increased mobile coverage, and demand for mobile content are driving user growth two times faster than the global population over the next five years.

This surge of mobile users, smart devices, mobile video, and 4G networks will increase mobile data traffic eight-fold over the next five years.

Smart mobile devices and connections are projected to represent 72% of total mobile devices and connections by 2020 - up from 36% in 2015.

Smart devices are forecast to generate 98% of mobile data traffic by 2020. From an individual device perspective, smartphones are dominating mobile traffic. They will account for 81% of total mobile traffic by 2020 - up from 76% in 2015.

The proliferation of mobile phones, including 'phablets' (a hybrid blend of smartphone and tablet features), is increasing so rapidly that more people will have mobile phones (5.4 billion) than electricity (5.3 billion), running water (3.5 billion) and cars (2.8 billion) by 2020.

Mobile video will have the highest growth rate of any mobile application. Consumer and business users' demand for higher video resolution, more bandwidth, and processing speed will increase the use of 4G connected devices. 4G connectivity share is projected to surpass 2G by 2018 and 3G by 2020.

4G will represent more than 70% of all mobile traffic, and 4G connections will generate nearly six times more traffic per month than non-4G connections by 2020.

"With the ever-increasing billions of people and things that are being connected, mobility is the predominant medium that's enabling today's global digitisation transformation," said Doug Webster, vice president of service provider marketing, Cisco.

"Future mobile innovations in cellular, such as 5G and Wi-Fi solutions, will be needed to further address new scale requirements, security concerns, and user demands.

"IoT advancements will continue to fuel tangible benefits for people, businesses, and societies."

F-SECURE SIGNS SYNAXON UK RESELLERS
February 8, 2016
F-Secure has signed with the Synaxon reseller group in the UK to offer system, endpoint and network protection suites as well as management and control and enterprise cyber security solutions and the Freedome VPN solution, All F-Secure solutions are now available to order via EGIS, either as boxed or for electronic software download.

Mike Barron, UK channel director at Synaxon, says: "This is a really great new signing for Synaxon UK and its members. The agreement with F-Secure will give our members access to a fantastic range of online security and protection solutions and, with the forthcoming SENSE range, F-Secure will be one of the first vendors to offer a complete range of privacy and protection offerings for the entire home."

F-Secure says it is also one of the first vendors to move into the potentially lucrative area of smart home security. Olli Bliss, head of partner sales at F-Secure, stated: "F-Secure is pleased to be working with Synaxon UK. As online protection and privacy becomes even more important in businesses and in the home, we see genuine potential for growth with partners. Synaxon can help us reach further into the channel and we'll be making sure its members have every opportunity to maximise the potential of our full range of protection solutions."

ACRONIS IN CLOUD PARTNER PUSH
February 8, 2016
An extension of the Acronis Global Partner Program, the Acronis Partner Program for Cloud is aimed at building cloud data protection services revenue with a subscription model for service providers, distributors and cloud resellers. The program provides solutions, resources, programs and incentives to help Acronis partners profit from the huge market growth predicted for cloud data protection services, which include backup, disaster recovery and file sync and share. According to IDC, the Data Protection & Disaster Recovery software market will grow to $8.1bn by 2019.

The Acronis Partner Program for Cloud supports any deployment model, it says, including service provider-hosted, Acronis-hosted and hybrid, and any business model with licensing flexibility. This includes turnkey cloud data protection services with minimal integration as well as offerings that are more deeply integrated into partner technology and services portfolios.

Multiple channel tiers aim to distinguish and reward a partner's sales performance, certification commitment and marketing collaboration. Incentives include stackable profit margins, incremental margins for deal registration, rebates and incremental accelerators. The program also features simplified partner on-boarding, free web-based sales tools and enablement programs, technical training, marketing programs and demand generation support, as well as co-op and market development fund programs, it says.

"The end users that we service need an easy and reliable backup and recovery solution combined with the knowledge and support we can deliver as a service provider," Charles Grau, vice president, IT and Operations at United Data Technologies (UDT). "The new Acronis Partner Program for Cloud allows us to build on our growing Acronis Cloud business by rapidly bringing proven data protection services to market in a way they easily plugs into our technology environment and existing business model."

For service providers and cloud resellers, Acronis delivers a multi-tenant, multi-tiered cloud architecture across infrastructure and data centres, operations and storage. Acronis Cloud solutions provide automation of services and complete control of provisioning, billing, monitoring and management, offering partners scalable solutions that can support millions of end users.