Comms Dealer

Following BT's announced that it has agreed definitive terms to acquire EE for £12.5bn, and with the due diligence now complete and financing in place, attention turns to getting the necessary regulatory clearance from UK competition authorities, pointed out Matthew Howett, Practice Leader, Regulation, Ovum.

The competition investigation is likely to focus on spectrum holdings and wholesale access for other mobile operators, he believes.

"BT anticipates that the transaction will need to be cleared by the Competition and Markets Authority (CMA)," said Howett. "Depending on whether or not remedies are required, that process could last between eight and 32 weeks.

"The operator does not expect clearance from the EC to be required. At this point in time, things generally look promising and the green light is likely to be given, albeit with concessions needed. One of those is likely to address the combined entity's spectrum holding. BT was particularly successful in the 2013 4G spectrum auction, acquiring spectrum at 2.6GHz, and the inquiry is likely to assess what adding this to EE's already sizable lot will mean."

What potentially complicates things is the planned acquisition of O2 by Three - it is not yet clear whether issues arising from that will be considered by the CMA separately or as part of this review, observed Howett.

"A combined Three and O2 would have a concentration of the lower-frequency spectrum (ideal for providing coverage), but would have no higher-frequency spectrum at 2.6GHz, which is needed for capacity given consumers' insatiable appetite for data," her added. "If both transactions are to conclude, there could be a reorganization of spectrum holdings between the two enlarged operators."

The other concession likely to be needed concerns mobile backhaul, reckons Howett. "Other UK mobile operators are already calling for guarantees that the wholesale products BT currently provides for backhauling traffic will be offered on a nondiscriminatory basis," he said.

"This issue could be resolved if all of the relevant products currently provided by BT Wholesale move into the BT Openreach division, which is already obligated to provide access on a nondiscriminatory basis.

"This solution is on the radar, and Ovum understands that Ofcom has been considering it since November of last year. Given the importance of these inputs to other mobile operators, a firm guarantee will be needed."

The addition of 5.7 million 4G customers helped EE to achieve its 2014 targets, including 25% adjusted EBITDA margin.

EE's 4G base is up 284% to 7.7 million, exceeding its six million target.

In its full year highlights EE delivered EBITDA +1.0% year-on-year (yoy) to £1,589m, a 25.1% (FY 2013: 24.3%) margin, with strong delivery of network and retail optimisation synergies (with H2 adjusted EBITDA margin of 25.8% - H2 2013, 25.3%).

Olaf Swantee, Chief Executive Officer of EE, commented: "We have achieved our goals of maintaining revenue leadership, generating £3.5bn in savings to reach a 25% adjusted EBITDA margin."

The company also reported mobile service revenue at a steady -0.2% y-o-y excluding regulation and 1.4% lower with regulatory impact. Generated 5.5% growth in EBITDA minus CAPEX.

EE experienced strong fixed growth with broadband base up +108k (+14.9%) y-o-y, driving revenues +18% yoy, as EE TV successfully launched.

BT has agreed definitive terms to acquire EE for £12.5bn. Integrating the two companies will accelerate BT's mobility strategy and increase BT's capacity for future investment. EE is the leading mobile network operator in the UK with 31m customers of which 24.5m are direct mobile customers and 834,000 are fixed broadband customers.

The consideration for EE will be payable as a combination of cash and new BT ordinary shares issued to both Deutsche Telekom and Orange

The cash consideration will be financed by a combination of new debt financing and approximately £1bn from the placing of new BT shares. The Equity Placing will be launched in due course

Following the Transaction and Equity Placing, Deutsche Telekom will hold a 12% stake in BT and will be entitled to appoint one non-executive member of the BT Board of Directors. Orange will hold a 4% stake in BT.

BT expects to achieve combined operating cost and capex synergies of around £360m p.a. in the fourth full year post Completion. This is equivalent to a net present value of around £3.5bn before integration costs or around £3.0bn after integration costs.

BT expects to generate revenue synergies by providing a full range of communications services to the combined customer base. This includes BT selling its broadband, fixed telephony and pay-TV services to those EE customers who do not currently take a service from BT.

BT also expects to accelerate the sale of converged fixed-mobile services to BT's existing consumer and business customers and offer new services, using both companies' product portfolios, skills and networks. BT expects to generate revenue synergies with a total net present value of approximately £1.6b.

The Transaction values EE at a multiple of 6.0x 2014 EBITDA and 9.6x 2014 OpFCF, adjusted for the net present value of the operating cost and capex synergies.

BT Chief Executive Gavin Patterson said: "This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them. The UK's leading 4G network will now dovetail with the UK's biggest fibre network, helping to create the leading converged communications provider in the UK. Consumers and businesses will benefit from new products and services as well as from increased investment and innovation.

"The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities. The enlarged BT will offer significant opportunities for employees as we lead the creation of a world-class digital infrastructure for Britain."

EE Chief Executive Olaf Swantee said: "Joining BT represents an exciting next stage for our company, customers, and people. Today's announcement will ensure the UK remains at the forefront of the mobile revolution, bringing even more innovation and investment in world leading connectivity for our customers."

Deutsche Telekom Chief Executive Tim Höttges said: "The transaction is much more than just the creation of the leading integrated fixed and mobile network operator in Europe's second largest economy. We will be the largest individual shareholder in BT and are laying the foundations for our two companies to be able to work together in the future. This is another example of the consistent and successful execution of our portfolio optimisation strategy."

Orange Chief Executive Stéphane Richard said: "This is a landmark transaction for Orange and the next natural step in the evolution of BT and EE. We are confident the combined company will go on to provide new and exciting services to its customers as the demand for data and connected services continues to grow."

Radius and Panasonic have marked the next phase of their joint 'storm in Partnership with Panasonic' cloud PBX offering with two events for UK Panasonic dealers, covering the north and south of the country.

The first took place at the Etihad Stadium, Manchester, home of the reigning Premier League football champions Manchester City, followed two days later by the southern leg at Radius Court, Bracknell, headquarters of Radius Communications.

The events drew numerous prospective dealers to the unveiling of the new 'storm in Partnership with Panasonic' Rewards Scheme, which offers a range of benefits to successful distributors and dealers, such as participation in invitation-only events and dedicated cloud communications workshops.

The sessions also focused on selected enhancements to the storm platform's SIP trunking, Cloud PBX and Cloud Contact Centre features.

Taking part alongside Panasonic and Radius presenters were representatives from Panasonic distributors Trust Communications and Electromaster.

Trust and Electromaster are both fully licensed and trained to sell 'storm in Partnership with Panasonic' services through their own dealer channels country-wide.

Throughout the course of the events, delegates were also guided through the intuitive web-based storm onboarding portal.

This portal enables dealers to configure, deploy and bill services for customers.

John Rees, Director at Radius Communications, commented: "The buzz around this venture has continued to build since we initially announced the partnership a year ago.

"These events were well received and we now look forward to following up with a series of roadshows and training sessions on our capabilities for all our dealers and distributors."

Networking and AV distributor Square 1 Products has introduced a new cloud-based telephony service to its product portfolio of hosted solutions.

The service, known as Cloud-Call, is delivered over a carrier-grade secure IP network directly to end users' offices with IP desk phones connected to their LAN and scalability to meet the needs of SME and enterprise organisations. 

"Although hosted services are relatively easy to sell due to the lack of capital expenditure, an overall reduction of end user communications costs and delivery of richer capabilities, all resellers working with Square 1 Products receive one-on-one advice and support during every step of the sales process," said Gary Conner, Sales Director (pictured).

"Defining a compelling solutions proposition needs to take into account the fine balance between product demand and the profitability we want to see for our resellers, and the savings and increased capability that advanced technology can provide to their customers.

Business analysts predict that over half of UK businesses will be utilising hosted telephony within the next three years.

"Since the early adopters of hosted telecommunications, the channel has seen a steady rise in demand for this service with predictions of a mainstream uptake ready to erupt," added Conner.

Belfast-based Atlas Communications has signed up its 100th super-connected broadband customer, Mascott Construction.

Atlas is a registered supplier under the Belfast City Council super-connected cities scheme which gives businesses with inadequate broadband speed vouchers worth up to £3,000 to install high speed broadband connections.

Mascott's IT Manager Sam Gaw said the company, based at Heron Road in Belfast, had been suffering from the area's very slow broadband speed.

"Trying to get 8, 9 or 10 people connected at the same time led to bottlenecks, while downloading and uploading tenders took forever," he said.

"There is no facility to lay fibre optic cable in the estate, but Atlas came to the rescue with wireless broadband. As the work was covered by the Superconnected voucher, we only had to pay for the VAT, which was refundable."

Manus Savage, Atlas Programme Manager, said: "We aim to deliver broadband at a price that fits most businesses and do it a way that is high impact, rapidly deployable and with as little disruption as possible.

"As well as offering high speed downloads similar to fibre to the cabinet services, our service provides higher upload speeds making it ideal for media and content intensive businesses.

"For those businesses with previously limited broadband capacity this service opens up much greater access to cloud based and remote access services providing new options for how an organisation chooses to operate."

Pictured: Manus Savage (left) with Sam Gaw

Arrow Electronics has acquired RDC, an Essex-based subsidiary of Computacenter UK for £56m in a move to expand its geographic footprint in the EMEA.

As a part of the deal Arrow signed a five-year operating agreement with Computacenter for its IT disposal services, which remain a part of Computacenter's customer proposition.

RDC delivers IT equipment disposal services, including secure data eradication, and manages the remarketing and redeployment process. In 2014 its sales was estimated at £56m.

"This acquisition broadens Arrow's value recovery business in Europe. RDC will allow us to better address the growing requirements of our global customers," said Michael J. Long, Chairman, President and CEO of Arrow.

Security vendor Bloxx is reporting year-on-year growth of 20% for its channel business. This record growth follows the appointment of Mark Gibson as sales director last year and a re-engineering of the company's business operations to become more channel-centric.

The new channel focused strategy is reaping dividends. Accelerating its diversification into the managed security service provider (MSSP) and cloud markets and demonstrating continued growth in education, Bloxx signed seven new partners in the last quarter of 2014 alone.

Gibson said: "Over the last year we've spent a lot of time listening to what the channel really wants from its relationships with vendors. We fed that back into the business to ensure we're working more collaboratively with the channel and providing the support they need.

"The channel's relationship with end user organisations is becoming much more consultancy based and we're helping a lot of partners understand - as well as take advantage of - new business opportunities that come their way."

To support its growing partner numbers the company has appointed Linzi Shepherd as a channel manager. She has a track record in developing high performing channel programmes at companies such as HP and Dell.

Key drivers for growth are coming from sectors which increasingly need to manage a hybrid of IT environments, ranging from traditional to virtualisation and the cloud.

In 2015, Bloxx will be responding to these drivers and evolving its solutions to help companies dynamically respond to these changes. Alongside this, Bloxx is focused on building new partnerships to develop its successful OEM business.

Gibson added: "Last year was a pivotal year for our relationship with the channel and we have big ambitions for 2015. Now that we have the right structure in place to support and work with the channel, we will be looking to expand our programme into EMEA and the US."

The core catalysts of innovation impacting all of humanity are connectivity and convergence, claims Frost & Sullivan's Growth, Innovation and Leadership (GIL) 2015: Europe.

The GIL congress returns to London for its seventh consecutive year on Thursday, 14th May at Royal Garden in Kensington. Over 200 industry leaders are expected to convene to share ideas and strategies to make their business choices successful.

With his keynote on 'New Convergence Business Models', EIA Partner & Director Dorman Followwill will discuss why convergence plays a key role in identifying new business models that drive growth.

Directly after there will be a keynote address showcasing global leadership in connectivity and convergence driven innovation in healthcare through the 100,000 Whole Human Genome Sequencing Project lead by Genomics England.

The Chief Scientist spearheading this project globally on genomics and personalised medicine, Professor Mark Caulfield, will explore this project.

"We are seeing that the core catalysts of step-change innovation across industries and geographies are connectivity & convergence, and one of the most incredible examples of global leadership in innovation is happening right here in the UK with the 100,000 Whole Human Genome Sequencing Project," said Followwill.

The one-day congress is part of Frost & Sullivan's Growth, Innovation and Leadership community that represents a global network of over 5,000 senior executives.

Resellers risk losing cloud customers because they aren't extending their product range fast enough, according to a study which found that 40% of IT leaders are now relying on outsourced providers to deploy UC solutions, while 78% have adopted at least one cloud service, according to recent statistics by the Cloud Industry Forum (CIF).

However, a recent report by 451 Research has also found that a third of all customers are not satisfied with the level of service provided.

Piers Linney, Co-CEO of UK-based Cloud Services Provider (CSP) Outsourcery says that one reason why one in three IT leaders are not satisfied with their provider is because their cloud supplier has not been able to keep up with their evolving requirements - and as customer awareness of the options grows, existing suppliers are not engaging in conversations with their customers about a world beyond on-premises deployments of ICT and managed services.

Linney said: "Adopting a cloud-based email or UC service is one thing, but moving compute and data storage wholesale to the cloud and then integrating it with legacy systems is something entirely different.

"It's great to see that more IT departments are approaching and using outsourced providers to deploy cloud-based services within their organisations. However, taking an incremental approach to adoption brings its own challenges.

"IT leaders will either need to continually extend the range of cloud suppliers they use, which could bring issues around accountability, service integration and value for money, or they would need to change their existing supplier to one that offers a broader cloud offering. Neither option is straight-forward.

"We have found that the UC market is highly fluid because of this issue. Cloud has been a particularly popular approach for this area of IT due to the complexities of converged solutions. As organisations become more comfortable with outsourcing IT service provision, they are looking to their supplier for a broader range of cloud deployment options.

"However, some only find disappointment. IT leaders need to look ahead to where they want their business to move in the future. They need to consider whether the outsourced provider under consideration has the ability to move at the same pace as their business and if not, how to handle this situation.

"The universe of IT and UC suppliers will divide into those that make the substantial investment required in new platforms, systems, intellectual property and personnel, versus those that focus on offering professional services and reselling subscription services. Many organisations in this space will not be able to achieve either.

"What's more, this means that resellers need to choose their target markets and service range carefully. If they are going to face demands for greater product and service offerings from their customers, they in turn need to assess their partners to make sure that they can swiftly respond in the same way."