ABRY Partners' latest move to acquire Masergy Communications is evidence of the interest that private equity companies have in purchasing competitive telecom service providers.
While ABRY is not revealing the price of the deal, under the terms of the agreement it will buy all of the existing equity of Masergy. Expected to close in the next three months, ABRY said the deal provides "liquidity for the founding investors and introduces an experienced equity partner for the company's continued growth."
Ed Gubbins, Senior Analyst, New Paradigm Resources Group agreed, adding that much of Masergy's growth will come from offering new cloud services like Sofware as a Service (SaaS).
"Masergy's network and customer relationships have a clear value today that will only increase over time as it gets more directly involved in cloud services, a market where it where it has a lot of room to grow," Gubbins said in an interview with FierceTelecom. "The company does about $100 million in annual revenue today and has been profitable throughout the economic downturn."
Gubbins added that "the company partnered with a hosted VoIP provider this spring, but it could ultimately do much more in that arena than it's doing today, so there's a lot of potential upside for this acquisition."
One thing that won't change will be the day-to-day operations, since ABRY will leave the existing management team in place.
The private equity firm can't seem to get enough of buying up competitive service providers. Last fall, ABRY acquired the former RCN Corp. for about $1.2 billion. After the deal closed, ABRY split the consumer and business divisions into separate divisions and rechristened RCN Metro, the business and wholesale division, as Sidera Networks.
With many fiber-centric service providers cashing in on new wholesale opportunities like wireless backhaul and new enterprise Ethernet service needs, ABRY is trying to cash in on assets that are now seeing new use.
However, ABRY it is not the only private equity firm purchasing competitive telecom assets. Alinda Capital made a $137 million deal to acquire a 50 percent stake in Dukenet, while Court Square took over the ownership of FiberTech.
- see the release
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