Comms Dealer

Sky has entered the business comms market for the first time via launch partner Fluidata to offer a high capacity Ethernet solution.

Sky has formed a SNS Wholesale division that will leverage Fluidata's comms market experience and address up to 95% of businesses in the UK. The ISP will also provide a dedicated support team.

Fluidata MD Piers Daniell said: "Customers choosing to commit to long-term high capacity connections strengthen the growth potential in their businesses.

"Sky's investment in the consumer market means we can push 1Gbs connections as standard and ensure customer connectivity is future-proof."

Graham Sargood, Sky's Director of Telecoms Wholesale, added: "Our investment in a telecoms infrastructure to deliver voice, video and data services to our residential customer base also enables us to serve the business marketplace."

All services will be available with SLA+, Fluidata's standard guarantee of service up-time.

Intermedia has been acquired by Chicago-based PE firm Madison Dearborn Partners (MDP). Intermedia is known as the world's largest independent provider of cloud Microsoft Exchange email, generating annualised revenues of $200m with 75,000 customers, 6,000 active partners and 700 employees around the globe.

The deal sees Intermedia's shareholders led by Oak Hill Capital Partners sell their stake in the company to MDP and company management. Intermedia, which was founded in 1995, was acquired by Oak Hill in 2011.

The partnership with MDP is expected to accelerate Intermedia's growth trajectory through increased investment in the company's channel partner programmes and more acquisitions.

Michael Gold, who will remain Intermedia's CEO, said: "Over the past five years we've more than tripled our revenues, EBITDA, users and product offerings. We've also experienced dramatic growth of our customer and partner base."

Zaid Alsikafi, a Managing Director at MDP, stated: "Intermedia is successfully capitalising on the global shift to the cloud, and possesses tremendous upside potential to capture further opportunities with its reach, scalability, customer support offerings and enhanced product functionality."

Gold added: "Recognising that the channel influences 65-75% of IT spending, we've built our business to meet the needs of the channel. Intermedia's cloud applications and management platform provide a number of key benefits for our partners, including a private label model, as well as operational, technical, marketing, and sales support. With MDP, I look forward to further strengthening our leadership position in the $20+ billion cloud business applications market."

The transaction is expected to close this calendar year, subject to customary regulatory approvals and other customary closing conditions.

Dark fibre trailblazer Exa Networks and training company Copper Road UK show what is possible for CPs once they've seen the light.

Strategically, the move into dark fibre was a natural next step for Exa Networks and an evolution of the company's existing business model. Far more revolutionary are the great strides that have been made in how Exa Networks leverages dark fibre and the upsides are truly transformational for customers and channel partners. Until now there have been few if any dark fibre procurement options for companies such as Exa, due to scarce availability and high costs. But alternative pure fibre infrastructure providers such as CityFibre have unlocked the pent up potential for limitless capacity and end-to-end network control for smaller players with big ambitions.

"As an ISP we've been delivering connectivity services and content filtering into the business and education market for 14 years," explained Mark Cowgill (pictured), co-founder and Director, Exa Networks. "Although we have done well, we had no option but to use the same national and local infrastructure with the same restrictions as every other ISP. But running dark fibre and our DarkLight service is a game changer for us and our customers. It's not just opened new doors, it's kicked them off their hinges. Potential customers or partners we'd been trying to talk to for years, who simply wouldn't take our calls, suddenly came knocking on our door when we launched DarkLight. We have gone from being a competitor to a market leader with an offering that other providers simply cannot match."

To prove the point Cowgill cited two of examples. The price for Gigabit connectivity in the UK (for instance 1Gbps on 1Gbps leased line) is on average circa £13,000 per year. Exa's Gigabit on DarkLight is a mere fraction of that figure. "Another great example of dark over lit for customers is that if you take, for instance, a 100Mbps leased line on a 100Mbps bearer, if for any reason you needed to increase bandwidth for a couple of days (for example, a conference at a hotel) to 2Gbps, it is simply not possible. The customer would have to order a new 10Gbps line months in advance and then commit to the bandwidth and the line for a minimum of one year.

"On our DarkLight service, if a customer finds themselves in this situation they can give us a call and get a temporary increase, paying a tiny fraction of what the previous option would be, and just have it there for whenever needed."

Taking on dark fibre is technically not too far removed from adopting lit, noted Cowgill. "Yes, you need to have an understanding of the optical and transmission side and expensive termination and network equipment, but the key point is to have the right network from the outset. We are fortunate to have operated our own network and infrastructure from day one. Those wanting to start from scratch need to allocate time, expertise and money before they can deliver their first circuit. For this reason Exa's partner programme exists to help comms providers more easily deliver dark fibre to their customers.

"The concept of dark fibre is new to many end users and comms providers, but it is taking off rapidly. If you are not in a position to deliver these types of services soon, you are going to be in a bad place competitively speaking. Our reseller and partner programme gives CPs the ability to offer our DarkLight service right away, without needing either the network expertise or expense. The nature of the product means there is little to no competition and it is a unique opportunity for our partners to deliver a future proofed Internet connection to their customers today, and one that will generate recurring revenue for years to come."

For resellers wanting to climb aboard the rolling dark fibre convoy they should consider three important factors, advises Cowgill. Firstly, network availability. "It is no good having a product that only a couple of people can get," he stated. "You need as big a network as is financially and technically possible to reach as many customers as you can."

Secondly, price. To make a step change in Internet connectivity in the UK for business and education organisations there needs to be a competitively priced product. "It's not complicated," explained Cowgill. "If the investment for the CP or end user is too great, nothing will change. Finally, the ability to listen and respond is crucial. As an ISP we need be able to openly talk to our dark fibre suppliers and for them to listen to our requirements and concerns. Anyone who has been in this business for a long time will know this is a big ask, but it is vital."

According to Cowgill, alternative network providers such as CityFibre are best placed to meet all of these essential requirements. "Having a single main provider stifles growth and does not generate competition or technological advancement," he stated. "The country needs alternative network providers who are willing to invest in the UK and help ISPs such as ourselves deliver world leading connectivity and services to organisations throughout the country."

The undeniable benefits of dark fibre to the industry and customers are not the sole rationale behind its widespread appeal. The limitations of the copper-based infrastructure also reaffirms unassailable arguments in favour of a pure fibre future. Enter Copper Road UK, a company that specialises in helping ISPs of all sizes prepare for the journey from copper to fibre by refocusing their sales and commercial approach. Copper Road UK Director Marcus Dacombe commented: "The legacy infrastructure that exists will always have a use but copper is not going to keep up with the exponential increase in demand for data. Fibre is the natural successor.

"As an industry we have never stopped developing more secure, faster and more cost-effective ways of transmitting voice and data, and a pure fibre future is within reach of the mass market. Providers that grab the opportunity to help their customers to develop a connected strategy are going to be in a stronger position than those who just resell comms products."

Access to dark fibre changes the discussion from how to make the most of a scarce bandwidth resource without losing control of costs, to how limitless capacity and flexibility can be leveraged to differentiate, drive efficiencies and prepare a business for the long-term future. "The conversation still starts with what a customer is looking to achieve, but it should then demonstrate how fibre can grow and sustain the business, rather than a series of alternative connection technologies," added Dacombe. "Fibre is an enabler but the return on investment, perceived quality and ease of use are the real decision drivers. The savvy reseller helps customers to understand how fibre can underpin growth and then offers margin rich products based on OTT services. The provider becomes a partner rather than provisioner, pursuing an integrated approach where the connection and services are wrapped together in a value proposition."

Comms providers should sensibly question their current purpose and whether it dovetails with the needs of a fibre-based future, believes Dacombe, who pointed out that sales people will inevitably be required to adapt their approach to generating new business. "There is a great community of sales professionals within the provider community," stated Dacombe. "However, there are also a number of people who are reliant on their previous experience.

"A good sales manager doesn't treat the customer as a quick win sales prospect, but instead relishes the opportunity to build a lasting relationship and become that customer's go-to expert. Recruiting people who can learn and grow with the technology is essential. Fibre sold on its own is just another connection technology, but sold as part of a connected strategy it enables customers to operate in new ways that generate business growth."•

Denying an entire nation the benefits of dark fibre is simply not an option. But there is little that most comms providers can do against monolithic national operators dragging their feet, until now. Here, Commsworld CTO Charlie Boisseau explains how the availability of dark fibre enabled the company to master its own destiny and liberate customers from the constraints of an inadequate infrastructure model.

First question, what does the comms industry want? Answer, it wants massive national dark fibre availability followed by mutually planned routes to market based on staunch partnerships with alternative providers. Commsworld's response to CityFibre's dark fibre proposition has granted that wish. The second question is how to switch a higher number of comms providers onto unlit fibre and further advance a national connectivity revolution.

According to Boisseau, adding volumes of dark fibre to the armoury of the channel is a no brainer. "Throwing an abundance of dark fibre into the industry will make the supply chain richer, even if you're not able to consume it directly," he said. "The industry will attract new providers such as ourselves doing clever things with dark fibre, readily wholesaling it back to the rest of the market. For example, we're planning to launch national Layer2 access to 1Gb/s and 10Gb/s Ethernet using CityFibre under our Fluency network brand name. Alternative network providers are hugely important in this space."

Commsworld uses dark fibre as a means of backhaul between its metro PoPs as well as an innovative access circuit technology for providing connectivity services to customers. "The traditional fibre and Ethernet/leased line carriers struggle to deliver against their SLAs, but owning and managing the service end-to-end puts us in control and allows us to deliver over and above the industry standard," added Boisseau. "Dark fibre also promotes innovation way beyond the scope of traditional metro Ethernet and leased line services which are the core component of most offerings from providers.

"If the sector continues to be shackled by the same old ubiquitous access networks with the same products and services underpinning the country's telecoms industry we will continue to be frustrated by the status quo. With a lack of innovation and an obscenely slow drip-feed approach to the roll out of new products and services, we really can't rely on the usual suspects to revolutionise our national infrastructure. For this reason, companies like CityFibre, with its fresh approach to funding and investing in new build networks, are absolutely critical."

Commsworld already provides flexible bandwidth options to its customers, with the ability to go from 1Gb/s to 10Gb/s in just days instead of weeks or months and without the huge cost. "We are also selling our own brand of wavelength-based optical services for enterprise and service provider customers, all over our own infrastructure, under our own control and with disruptive pricing," added Boisseau.

Adopting a full dark fibre strategy was a natural evolution for Commsworld, and a welcome progression from its former piecemeal use of dark fibre in its backhaul network. "On occasion we found the opportunity to use dark fibre for customer circuits, but the lack of a dark fibre asset to tap into was the main block to being able to deploy more dark fibre-based services," commented Boisseau.

"The likes of BT, Virgin, Vodafone etc don't currently sell dark fibre, so it was only an option in select areas in cities where one of our fibre partners happened to have network. But CityFibre arrived and built hundreds of kilometres into cities where we operate. It has been a game changer. Having an abundance of dark fibre asset to consume, and the ability to influence where it is built is an unprecedented paradigm shift in our space."

Access to dark fibre has greatly advanced Commsworld's capabilities. In the past the company had to rely on managed access tails from providers such as BT even though it had its own national MPLS network. "At that time our products and services looked similar to the rest of the industry but we nevertheless achieved success in selling customers the benefits of our agility and willingness to do things you just can't buy elsewhere," commented Boisseau.

"However, our success was limited by our inability to take that innovation further and differentiate in new ways. But having access to a raw piece of glass between our network and our customers means there is no limit to that innovation. We are no longer seen as a tier 2 operator buying network components from others. Having our own on-net fibre capability with all of the flexibility and scope for innovation it brings puts us on a level playing field with large national operators. The only difference is that our network is the result of a partnership with CityFibre, and we didn't go bankrupt building it."

It is a boon to Commsworld that it has in-house optical expertise and the knowhow to install, troubleshoot and maintain networks consuming dark fibre. "If you're planning to take dark fibre as a component of your offering, I would recommend putting your engineers through a general fibre awareness course and invest in some basic tools," advised Boisseau. "No engineer should be without an optical light source and meter and a good set of fibre cleaners."•

It is a stroke of good fortune for Clarion that its mission is also its biggest opportunity - to change the culture of re-use and waste in the phone system marketplace, according to Managing Director Tom Hunt.

Clarion's responsibility dovetails neatly with its commercial ambitions and this perfect fit is reflected in Hunt's long-term association with CEO Ben Bradbury with whom he has been a friend since childhood. Prior to joining Clarion in 2003 Hunt worked as Chief of Staff for an MP for four years focusing on environmental and technology issues. This experience was transferred to Clarion and helped to establish the company as an 'envirotechno' trailblazer with Hunt and Bradbury leading a phone system hardware re-use revolution across 50 countries - and they recently refurbished their millionth handset.

Clarion was set up with just £7,000 and currently generates circa £4 million annual turnover and employs 40 staff. The company moved from London in 2013 to 40,000 sq ft premises in Billingshurst, providing enough space to set up a remanufacturing plant. "We now have a state of the art test, refurb and repair centre and process over 3,000 IP and digital handsets a week," said Hunt. "Our current challenge is convincing people not to be wasteful and that high quality Grade A refurb kit is not the same as second hand. We are often stripping out motherboards, relaminating and recasing handsets. That is why we call it better than new.

"Our products go through an extensive refurb bench testing process and are given a warranty that is double the length of a new one. We also replace faulty handsets the next day, unlike manufacturers that require phones to be returned for repair which can take weeks. Our resellers don't pay to have their handsets maintained, which gives them more margin to play with when they are quoting for maintenance. Furthermore, to underscore our commitment to the refurb revolution we invite people to take part in our Pepsi Cola challenge by sending out new and reconditioned phones so they can make their own judgement."

Clarion began its commercial life at a time when the market was awash with VC money and cash was being spent on the very best of everything to set up new businesses. This extravagance played into the hands of Clarion's founders. "When the bubble burst much more used kit came onto the market and we approached receivers and liquidators to purchase it, paying a fair value and indirectly returning more money to creditors while creating a market for people who needed heavily discounted comms," said Hunt.

"Reusing the equipment meant that it was not being sent to landfill, which was still happening back then. Today, with our suppliers and purchases worldwide, we know what is in demand and what is coming into the marketplace and can create fair value so that both parties gain."

What stood out most to Hunt was the extent of waste and the opportunity to create something remarkable in a new market. "Companies pay a high price for new kit that devalues quickly," said Hunt. "If a company goes bust the chances are that its ICT kit will be skipped. On the flip side, companies wanting to get off the ground need comms equipment but their pockets may not be deep enough to buy new products. We saw a market for trading used telco kit so we also started scooping up deals at the auctions."

Clarion's first purchase was an old Argent Branch system with many DT3 handsets bought from an auction house in Croydon. "I had a buyer in mind so I could outbid others who were chancing their arm for a bargain," recalled Hunt. "I carried it away with difficulty in four hessian sacks and managed to get it into the car. Since those 'rag and phone' days we have developed into a fully fledged partner to the telecoms trade providing telephone systems, cards and handsets, plus repair services for resellers. We configure IP handsets for hosted providers and ship emergency maintenance parts to our customers around the globe.

"The icing on the cake for our customers is that the Grade A reliable equipment we provide is also helping them to decrease their carbon footprint. This helps them target sectors such as the NHS and Local Government which are some of the fastest growing markets for refurb in the UK. We also give the money we make from recycling to MIND, a charity close to our hearts."

Clarion's all singing and dancing refurb and repair facility houses a team of engineers who provide technical advice to resellers; while the sales team supports resellers in winning hosted and on site telephone system deals. Hunt explained: "We do this in two ways: By buying back the old telephone system and allowing the reseller to subsidise the deal, and we help them undercut the competition. Most deals on new kit come with a discount, let's say 20 per cent. If we then provide the handsets at 80 per cent off the new price resellers win the deal."

Perhaps not surprisingly, manufacturers and distributors were perturbed by the attraction of Clarion's proposition to resellers, and it didn't take long for some to follow its lead. "Cisco and Avaya entered our market with their own certified refurbished offering," stated Hunt. "This move by the manufacturers has helped to expand the market, reinforcing the message that refurbished is just as acceptable as new."

A key growth area is the supply of IP handsets for use on hosted platforms. "We have several partnerships with hosted providers and resellers," added Hunt. "They send us their equipment and our engineers configure it as they wish. Servicing hosted VARs is the fastest growing part of our business. We continue to stress to them the importance of the benefits of equipment re-use to win business and save their clients needless expenditure, and to take some responsibility in protecting the world's resources by reducing their carbon footprint. We stock every type of IP handset.

"There is no doubt that most if not all business comms will soon be in the cloud. But we should not be getting ahead of ourselves. For years we were told that the introduction of IP would mean the death of traditional fixed line business. That was back in the mid-noughties but look where we are now. There is a huge chunk of the market still invested heavily in on-site telephony. So we continue to focus on supporting our resellers in providing heavily discounted refurbished telephone systems and handsets to their large corporate clients and the public sector."

Hunt cited one such example, an organisation with a legacy system which is rolling out 5,000-plus refurbished handsets saving the business over £330,000. "There's plenty of margin to be shared between us, the reseller and the customer," said Hunt. "But large corporates and the organisations our clients service and maintain are now moving their data into the cloud. The voice will soon follow. The big question is whether they go straight to the headset/PC set-up or keep the handsets. Current trends suggest the latter. But we are also moving more into the headset market."

Another growth area is the repair division. "We have a team of qualified engineers with a broad range of technical skills," said Hunt. "Some of the vendors support us and provide their schematics, otherwise we work it out. One of our next steps will be to roll out a 3D printer division for helping produce hard-to-find parts."

Hunt advises resellers to embrace refurb whenever and wherever possible. "Being a reseller is about adding value, and with a reliable refurb and repair partner resellers are adding a significant amount of value to their offering," he commented. "In simple terms, resellers gain a competitive edge and reduce their carbon footprint."•

From car phones to PCI compliance: How Aerial Business Communications Managing Director Paul Davis made it big in comms.

Portsmouth-based Aerial Business Communications celebrated three decades in business in June. The company, formerly known as Aerial Telephones, was founded by Davis and began life as a mobile and car phone retailer operating from a small shop and employing three sales staff. Aerial has since developed into a multi-award winning full UC company with a 50-plus headcount, supplying mobiles, telephone systems, IT and Internet connectivity services.

It all began when Davis, as an opportunistic 22-year-old, worked in the Middle East for a Dutch company selling reprographic equipment to the oil industry. His plan was to do this for three years, and with time running down he began the search for a fresh opportunity on home territory in 1985. "The Daily Telegraph was advertising sales jobs in the new car phone telecoms market," explained Davis. "I found myself talking to Geremy Thomas who co-founded the Carphone Group (subsequently sold to Cable&Wireless). We struck a deal and I buzzed with exciting ideas."

The following year Davis approached the banks with a business plan but they could not see the commercial case for car phones. "Banks have been wrong on many occasions, and this was no exception," added Davis. "I invested my own money and bought five car phones, one for myself and four for stock with a total value of over £8,000. I sold to local people with expensive cars and soon required retail premises and staff. This was the start of Aerial. Today, we are O2's biggest direct partner and part of Samsung's B2B partnership programme, accredited as a B2B Expert. Much of our business is now truly converged and we have some large well known public organisations as customers. This way we are not so reliant on the networks."

Last year Aerial's mobile and data division grew by 65 per cent following a 40 per cent hike in new connections. "Although our base is predominantly business mobile customers we also saw a huge uptake in our fixed landline and broadband services with 279 per cent growth in this division in 2015," said Davis. "During the same period our IT systems and cloud services division grew by 16 per cent; and as awareness around the benefits of hosted phones and SIP trunks increases the demand for telephone systems also intensified, with 46 per cent growth in this division."

In just three years Aerial's annual turnover has ballooned from almost £9.4 million to £25.3-plus million and Davis is forecasting 2016 revenues of 30 million or more depending on potential acquisition activity. Based on its performance, Aerial has achieved a number of awards including O2's Digital Excellence Award 2015 and the CNA Customer Service Award 2014. This year the firm scooped the Best Medium Sized Business award and Overall Business of the Year gong in the local News Business Excellence Awards.

Aerial's customer base ranges from charities to blue chip companies. "The base is varied so we group customers into segments," commented Davis. "This enables us to offer more bespoke support, marketing and assistance. The aim is to understand the issues and challenges common to these sectors. "Our sweet spot remains the 50-100 handset model, though we've recently had some larger wins nationally. Customer satisfaction is key. The main challenge is managing the considerable resources in terms of staffing, time and revenue that are invested into our support services, but providing first class support has given us the opportunity build a loyal customer base."

As the workforce becomes ever more mobile, Aerial provides an increasing range of the latest digital applications such as Office 365, McAfee, Tugo, Just Call Me, Evernote and Box, plus tracking, lone worker protection, security, workflow solutions and data recording. "These applications assist our mobile customers in maximising the value they get from their devices," said Davis. "Aerial is always looking to add valuable products and services to its portfolio. All new additional products and services need to pass a number of suitability and capability tests to ensure the whole team believe in the service and understand its strategic place within the business."

A particular area of current interest, noted Davis, is PCI compliance. The market needs educating about confusing legislation and there is a need for affordable solutions that combine with existing mobile, telecoms and IT platforms. Portfolio developments last year include the addition of a radio leased line service. "Having a point of presence at our Portsmouth HQ means we can offer faster installs and more cost-effective connectivity packages," added Davis, also noting that Aerial offers Distributed Antenna Systems (DAS) technology which optimises in-building wireless, Wi-Fi and IP coverage in large buildings and isolated areas. The solution has proved popular in shopping centres, high rise offices and venues such as stadiums. Another recent addition to Aerial's portfolio is hosted call centre technology.

It goes without staying that an expanding product and services kit bag requires a sharp focus on in-house ICT skills development. "It is not enough to just offer these products, we need to create a solution-based service that offers what many talk about but few deliver - Unified Communications. Aerial approaches UC from a different angle. Our long history in business mobile means we are coming from the other side compared to most providers. By starting from the mobile framework we are able to create true UC solutions."

A key emerging trend is that customers now favour sourcing their communications from a single provider. Aerial's main growth strategy is to be positioned as a fully unified comms dealer, a one-stop-shop for all business communication solutions in terms of installation and ongoing support and maintenance. "This reaches into every department of the business from our marketing team who deliver a complete lifecycle marketing programme to the customer service team who must adhere to our customer charter," explained Davis. "Customers generally want a total telecoms package which of course includes full IT support. Every one of our customers has their own dedicated account manager that can provide assistance whenever they need it."•

As Epsilon Telecommunications transitions from a network firm into a software specialist delivering connectivity services, going digital and equipping the company with the right skills and mindset is key to its roll out strategy, explains CEO Jerzy Szlosarek.

Epsilon has made a long-term investment in its proposition and partnering strategy, and an equal measure of commitment has been placed on making the business fit for the future. Processes are being improved, employees educated, customers integrated and better supported, and the back-end rebuilt to manage high volume on-demand transactions. "We are not constrained by legacy cycles if we give our customers a platform model and position our connectivity solution as an application," stated Szlosarek.

Epsilon has circa 120 staff and maintains double digit year-on-year growth. The company has come a long way since it was launched in early 2003 in London by a group of entrepreneurs including co-founder Szlosarek. Epsilon is still 100 per cent privately owned and has subsidiaries in Singapore, Hong Kong and the UK. "From the outset our business plan was to offer a simple connectivity product in the voice market which was known as eConnect," stated Szlosarek. "It was one of the first products of its kind and enabled carriers to interconnect more easily for carrying voice traffic."

Epsilon has witnessed three milestones since beginning its journey. The connectivity product, eConnect, filled a gap in the market for customers who wanted a simple connectivity solution that could reduce lead times, remove risk from the commercial framework and provide a high level of customer service satisfaction. This connectivity product grew well for a number of years and enabled Epsilon to build over 45 PoPs across Europe.

"We then saw an opportunity to integrate colocation business as part of the interconnection, allowing us to operate a colocation and physical data centre environment," said Szlosarek. "It was about giving customers a combined colocation and interconnect solution. This was a turning point because we got into a much broader skill set and capability, and also acquired assets in Asia. We then opened in global markets and ramped up our brand which allowed us to attract a large number of customers and connections."

Having built a standard product in a global market Epsilon is now well into its third phase which is the transformation of the telecommunication business into a cloud-centric network - an interconnection for customers to simplify global connectivity while also having access to high quality infrastructure and preparing for the digital economy.

"The cloud phenomenon is changing the landscape and how we manage our media, communication and applications," commented Szlosarek. "The main change we see is more push coming from OTT services and the IT sector. New operators such as AWS and Microsoft are growing. We need to think about how we can adapt to the cloud and embrace IT to transform our systems and processes in our back-end as we transition from a telecoms business towards Platform as a Service (PaaS). Our current priority is to grow as a PaaS service provider. We are beginning to see customers take up services through our software portals and APIs."

As a provider of global connectivity solutions Epsilon is already leveraging software to provide a simple way for customers to build global connectivity infrastructures immediately. "We are transitioning more towards APIs, allowing our customers to have direct control over our resources," noted Szlosarek. "We are becoming an OTT network provider, positioning our applications and connectivity to the cloud market giving SaaS companies access to a global connectivity solution, while addressing traditional carriers, data centres and the managed services segments by providing more efficient, leaner and scalable services."

Epsilon is focused on the whole connectivity experience and is closely following the IoT/M2M story, evaluating the possibility of integrating solutions for such applications. "For now, we are focusing on the cloud access piece, providing support for real-time communications and simplifying connectivity into the last mile," confirmed Szlosarek. "The next step may be IoT and M2M enablement, but there are currently no clear solutions."

Epsilon also offers a white labelling service for its platform, enabling customers to reach new markets. "As a result, our customers are realising new opportunities and business models for themselves," added Szlosarek. "That allows us to innovate and build network and software solutions while enabling our customers to be more successful in their markets. The landscape is shifting and we are talking about partnering for success, working together through an application-centric model, while enabling new opportunities through white labelling.

"Resellers and SIs play a valuable part in the ecosystem, and we will form much stronger relationships with them. Resellers should embrace the power of the cloud and platform services to enhance their own capabilities. White labelling and platforms create a more dynamic and intimate customer experience. But the journey starts with understanding cloud and how it creates opportunities for customers." •

Activity in the telco M&A market remains buoyant with a noticeable trend emerging during the past few months, observes Paul Russell, Corporate Finance Partner for M&A at BDO.

In the second and third quarters of 2016 telecoms M&A saw previously struggling assets changing hands and according to Russell this development is a notable trend. "We attribute this to ambitious management teams seeking to grow by acquisition, rather than due to any sign of distress in the sector," he said. "The obvious deals being Maintel's £48.5 million acquisition of Azzurri and GCI taking over Outsourcery's assets."

Meanwhile, noted Russell, the sector continues to attract private equity interest with Livingbridge and FPE investing in Southern Communications and Optimity respectively. "Fund raising activity has also been strong, including Maintel's £24 million to part fund the Azzurri deal and Gigaclear's £24 million for its rural broadband roll out," he added.

The appetite for M&A has not, perhaps surprisingly, waned post-Brexit. "It has largely been business as usual," said Russell. "The market fundamentals remain strong. We estimate that only 10 per cent of M&A transactions have been lost due to Brexit. The vast majority of deals have not been falling over and new business M&A activity is at good levels."

This positive outlook is underpinned by £50 billion of dry powder in the private equity space. "We anticipate that PE houses will keep spending as evidenced by the recent Southern Communications (Livingbridge), Sabin (Lyceum) and IT Labs (ECI) deals," added Russell.

Numerous international and UK trade buyers are also actively looking to acquire and debt markets remain open. "We see overseas bidders spotting an opportunity in the UK with the fall in sterling outweighing the risks of Brexit uncertainty," noted Russell. "In particular, US private equity money is coming into the market which perhaps is not surprising given the pound's three decade low against the dollar. The acquisition of Lyceum backed managed services company Adapt by US PE house Abry backed Datapipe could be an early example of this."

The drivers of M&A activity will remain as they have been over the last few years, believes Russell. These are firstly a chance to diversify into new areas that can provide future growth. Alternative Networks' acquisition of Control Circle and Pulsant's acquisition of Onyx are good examples of this. Secondly, companies will continue to acquire bases or similar companies to provide organic growth, which is sometimes hard to generate across the industry. "What will probably emerge as a trend post the current deal flurry is an increased appetite for bolt-on companies to propel top line and EBITDA growth," said Russell.

Despite some previous high profile company plans not working out as expected such as Outsourcery and Azzurri, there is a healthy appetite among existing and new investors in the wider tech and telco space. "ECI, Lyceum and Livingbridge have all had previous experience in the space and invested in the last quarter in new deals," added Russell. "All of these plans will probably assume inorganic and organic growth and a desire to get to the magic £100 million turnover, circa £10 million EBITDA level."

There are two pricing models at play. Established, larger and growing companies such as Sabio and Southern Communications attract high valuations that are close to or at double digit multiples. However, this will not translate to a smaller base or company that is, for example, lower margin with single/few customer dependency, where the multiples will be much lower. "What is interesting is that I expect a bidding war to ensue for the right assets from the companies that all have new funding, and hence the prices of the smaller players may inflate," said Russell.

Clearly, there are some big shifts in the market at the top level with BT/EE, but the mid-market is also going through a change with companies that have been privately owned taking on investment for the first time, and companies that have been through their first PE cycle finding new homes such as Selection Services, Adapt and Onyx. "This means the lower mid-market gets consolidated, the players become bigger and the fight for juicy bolt-ons intensifies," noted Russell.

In terms of acquirers pursuing a diverse approach to the evolving market, with M&A in the area of new business segments (such as M2M) as a means to strengthen overall digital offerings, Russell expects to see this trend continuing with broad based players acquiring specialist companies to add further services to their offerings, and ideally cross sell across the existing base. "Clarinet's acquisition of the gaming specialist Ardenta is a great example," he said. "This type of acquisition both locks in customers through the specialist services and protect margins."

In such a buoyant M&A environment Russell expects the market to refresh itself. "The current generation of mid-market businesses that are being transacted came about as talented individuals left big companies to establish nimble start-ups," he explained. "As the market consolidates quickly I believe this will happen again, so in five years time the mid-market companies that we are talking about may not then exist.

"Deal activity in recent years has been driven by the convergence of voice and data and the battle to deliver UC. As both of these have been achieved from a technological viewpoint, we wonder what future technology and innovation will enable companies to outpace their peers."•

Interoute's acquisition of Easynet was a game-changing strategic move that made a real difference to its channel ambitions, according to VP for Strategic Partners Neil Downing.

The decision to acquire European managed services provider Easynet in September last year for £402 million was inspired and gave Interoute an opportunity to push for a stronger channel strategy. The move also offered the chance to make progress on measures such as widening the proposition and onboarding more scale, global reach, skills and new capabilities. The acquisition also expanded Interoute's networked cloud and communications services to national and multi-national enterprises across the world.

"Our biggest opportunity is to explore the channel more with our wider proposition and bring partners with us on this journey," stated Downing. "The potential is clear. We have a big partner business already and can grow it even more through the wider portfolio and increased global reach we now have."

Interoute provides a range of unified connectivity, computing and communications products and services to multi-national and national enterprises, such as UEFA, the European Space Agency, SCA and Saxo Bank, global telecommunications operators and Internet content providers. The company's commercial beginnings were born out of a vision to connect the business hubs of Europe with the continent's largest, fastest and most advanced fibre optic network which was completed in 2002. Today, the network connects nearly 250 data centres and colocation facilities across Europe, while interconnecting America, Africa and Asia.

Interoute's channel success rests in large part on Downing's industry experience, insights and know-how. He first entered the comms industry after graduating, joining BT as an engineer in 1996 but he quickly moved into commercial roles having shown a deep interest in the profile of buyers and their purchasing habits. Downing has always worked in the telecoms sector and attributes his flair for business to his father who ran his own transport company and made a good living in a high volume, low margin business with demanding customers and time scales. "This maps well to my experience of the telco industry," said Downing. "Despite being dyslexic my father was successful and could spot a margin at 100 yards."

Downing junior also knows how to spot an opportunity and joined Interoute in 2005. "Interoute had strong revenues combined with a start-up culture where costs were meticulously managed and all roles focused on revenue growth," he commented. "The enterprise market was still in its early days for us, but we could see massive potential and were committed to changing our structure and products to maximise the opportunity."

Interoute was originally designed to serve European telecoms operators with high capacity, big bandwidth services and it continues to support the major telecoms operators in Europe. But as demand for digital communications has grown, Interoute expanded its portfolio and expertise to provide international enterprises with infrastructure products, managed solutions and applications.

Key turning points for the company include the launch of Interoute Virtual Data Centre (VDC) in 2012. However, 2004 was also a pivotal year as Interoute moved away from being simply the carrier's carrier to provide enterprise services (now responsible for more than 70 per cent of revenue). This was followed in 2005 by the acquisition of VIA Networks which formed the basis for VDC. The launch of Interoute Cloud Connect in May 2015 was followed by the completion of a fully meshed global network with two new diverse network routes between Los Angeles, Hong Kong and Singapore going live in August 2015. "The growth of VDC has been an important part of our portfolio development, allowing Interoute to capitalise on the Infrastructure as a Service (IaaS) market by offering a flexible, scalable platform that customers can manage themselves," commented Downing.

Interoute's network connects 132 countries and includes 24 metropolitan networks in Europe's main business hubs and 17 VDC zones across Europe, North America and Asia. "Interoute is continually growing both its operational presence and global presence," added Downing. "Expect more announcements around VDC zones in the near future. The market is constantly evolving so we have to move with it. We are also doing a lot of work in security, but have the core blocks required by most resellers."

Partners are a key focus for Interoute's proposition, enabling them to provide platforms and tools to add value. "Organisations are under increasing pressure to provide feature rich services and Interoute's software defined services give partners the flexibility to buy only what they need, then evolve and scale with the customer," added Downing. "Many resellers or SIs focus on connectivity-based services but the market is changing and moving to the cloud. While connectivity is important, Software Defined Networking is disruptive and has the potential to disintermediate this market, so SIs and VARs should be looking at more flexible models and offering a more fully formed ICT infrastructure. They may not be able to separate voice, connectivity and apps in future propositions."

Downing's main challenge is ensuring that partners understand Interoute's wider proposition and how it matches their ambitions. "We are constantly innovating and developing new products and services for the channel," he explained. "Our networked cloud platform VDC has expanded to three new zones this year and gives channel partners one of Europe's largest IaaS cloud infrastructure platforms they can easily add a service wrap too.

"This is important because the sand is shifting for customers in terms of what and how they consume, and resellers need to respond to this change and evolve their portfolios. As well as the cloud there is a rise in demand for network integration. We help customers to overcome the big challenge of integrating existing legacy IT with new digital business application development. Another area of interest is how software defined Wide Area Networks (WANs) are evolving along with how people buy networking services."

Not surprisingly, Downing defines Interoute's culture as 'European and collaborative' combined with a focus on accountability. "We're responsible for a journey involving investment, spend and effort," he stated. "This is something that comes from management and permeates down, enabling us to change our culture and skills to support customers in a different way. We see Interoute delivering combined communications, compute and connectivity through a platform defined by customers offering as much control as they need. This will resonate with the market as Interoute can provide the infrastructure and ecosystem, with partners delivering around that proposition."•

Redstone's Managing Director Brendan Loughrey reveals how the company has strengthened its presence in the high growth smart buildings and smart technologies arena while leveraging cross-selling opportunities throughout the customer base, including many blue chip organisations.

Redstone has reinvented itself as a specialist in smartening up buildings and commercial spaces. This strategic shift was made possible through the acquisition in March this year of Connect IB, a smart buildings software and solutions business. Redstone now operates as an IT network and smart building systems integrator with a blue chip customer base and a 30 year heritage. Its roots reach back to 1986 when Cableship was founded by two former BT engineers. Following a period of acquisition the company became known as Communica and during 2004-2007 won some key deals including Bank of America, HSBC and Merrill Lynch. Communica also cabled many of the major buildings in Europe.

The company was acquired by Redstone in 2007 and six years later it had evolved into three primary service areas - mobile and telecoms, managed services and converged solutions. Redstone sold to Coms plc in 2013 and has since been developing and delivering smart building solutions, from cabling and infrastructure to smart building and then service and support. This year Coms plc changed its name to RedstoneConnect, merging the Redstone brand with the Group company.

Redstone has seen steady growth since its inception 30 years ago. The company has 300 employees including 185 engineers located on-site with customers. Last year revenues climbed 35 per cent to £40-plus million and profits rose 35 per cent to £7 million. "Redstone has delivered a number of new business wins that brought scale and breadth to the scope of our client engagement," said Loughrey. "For example, recent successes in our blue chip financial services customer base include a £5.4 million contract with a major global financial services client, delivering a smart building, ICT infrastructure and IT networking project."

The company also scooped a £0.9 million contract with an international financial services client to provide a Storage Area Network infrastructure and ICT refresh, and a £0.4 million contract to deliver an IT networking project with a leading provider of audit, tax and advisory services. "Our focus has moved towards the office space, enabling customers to create an enjoyable experience within their working environment through the use of technology," added Loughrey.

In recent years Redstone has developed its service areas, appointed a new CEO, Mark Braund, and launched a fully integrated smart building solution that makes spaces work more effective and efficient. Also top of the agenda is developing and expanding the Group's annuity revenue streams in software, managed services, support and maintenance, and rolling out its new occupancy management software solution called OneSpace. "In our always-on world employees expect to use their technology seamlessly," added Loughrey. "And with the explosion of mobile devices DAS infrastructures need to cope with this exponential rise in usage. The move to hot desking has enabled us to push our One Space product that allows employers to manage their space and report on its utilisation. This software also enables employees to engage with their workspace and ensure they can work in appropriate groups.

"The way buildings are now being constructed to include IT networks from the start is key to the evolution of the smart building space. Over the last 18 months we have seen a rise in landlord networks being installed that help the tenant in their occupancy. The need to drive out cost and improve returns through the occupation and running of corporate businesses comes as a major positive for us. The Group will broaden its intellectual property applications to a wider spectrum of smart environments and invest in research and development."

Re-industrialisation, or Industry 4.0, is another key trend being closely tracked by Redstone, along with the potential impact of IoT disruption. Both are aspects of the market that are breaking new ground and this is reflected in Loughrey's career at a personal level. "Pushing boundaries is important in all aspect of your career," he said. "The development of people is important to me and seeing how they continue to grow is a special highlight."

Loughrey's own career path is a shining example of his work ethos. After completing an electrical apprenticeship he worked for BT and completed further studies in telecommunications. "I then started with Cableship in 1987, initially as an engineer and moved swiftly through the ranks, running operations with a responsibility for 450 staff and delivering £55 million of projects. I completed an MBA in 2002 and this gave me a grounding in all aspects of business, from HR to finance. I still believe that working hard and doing the right thing, regardless of how difficult this can be, is the key to being successful."•