Vonage enhances business play with $114M Telesphere acquisition

Vonage has reached a deal to acquire communications-as-a-service provider Telesphere Networks for $114 million, another move in its ongoing mission to take a larger piece of the growing small to medium business (SMB) sector.

Under the terms of the agreement, Telesphere shareholders will receive $91 million in cash and 6.86 million shares in Vonage common stock. The companies expect the deal to close in 2014, pending regulatory approvals.

Founded in 2006, Telesphere provides cloud-based voice and Unified Communications as a Service (UCaaS) services, including call center solutions, collaboration, mobile office and HD multi-point video conferencing. The service provider can also ensure QoS with its own national MPLS network. 

Elka Popova, North American program director, Unified Communications & Collaboration Information and Communication Technologies for Frost & Sullivan, wrote a blog post that the MPLS will give Vonage Business services a clear differentiator over others that today rely on the public Internet to deliver service. 

"Many of the competitors in this market including 8x8, RingCentral and VBS offer services over the public Internet, which provides customers with some flexibility, but makes it harder to guarantee service quality and reliability," Popova wrote. 

One of the key focuses Telephere has had since its inception is targeting larger SMBs that have regionally distributed offices with its national cloud platform.

From the looks of it Telesphere is a profitable company. Telesphere said it expects 2014 revenues to be nearly $40 million, with over $50 million of revenue under contract for 2015.

Upon completion of the deal, Clark Peterson, CEO of Telesphere, will join Vonage as president of Telesphere, a Vonage company, upon closing. Peterson has 25 years of experience in the communications industry and currently serves as chairman of the Cloud Communications Alliance. 

Vonage may still be a relatively new player in the business market, but its efforts are paying off.

"Vonage Business Solutions' annual revenue growth has accelerated from 38 percent to 52 percent in a year, and we are confident in our ability to accelerate growth at Telesphere as we bring it under the Vonage umbrella," said Marc Lefar, CEO of Vonage, in a release.

The service provider said in its third-quarter earnings call that the addition of Telesphere will more than double Vonage's addressable cloud market opportunity, "immediately moving the company into a considerably larger SMB and enterprise market, which exceeds $15 billion in North America."

This is the second acquisition Vonage has made over the past year to enhance its presence in the business services market. In October 2013, Vonage purchased Vocalocity, a fellow VoIP provider focused on the small and medium business market for $130 million.

 For more:
- see the release
- and this blog post

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