TDC Partners with US-based VoIP Carrier iBasis for International Telephony
| Jan 15, 2008 | Wholesale Telecom Services | Competitive Update
| Analyst: Bernt Ostergaard
Current Perspective: Positive/Neutral
Vendor Importance: High
Market Impact: Low
Event Summary
January 14, 2008 -- TDC has signed a five-year deal with US-based iBasis for international VoIP telephony, reducing some 130 international carrier relationships to just one. TDC will buy all its international traffic outside the Nordic countries through iBasis, a subsidiary of Dutch KPN. Similarly, TDC will be the preferred Nordic provider to iBasis. iBasis will pay TDC $10 million in cash, while the outsourcing deal is expected to generate $80 million in new annual revenue for iBasis.
Analytical Summary
• Current Perspective: Slightly positive on TDC’s announced outsourcing of its global voice traffic to iBasis, because it reduces cost and improves overall network monitoring and traffic delivery capability. However, it is a decisive step away from control of its own international ‘presence’ and marks yet another retreat from international operations for TDC.
• Vendor Importance: High to TDC, as it reduces cost while improving overall network management and the deal will lead to increased traffic volumes on it Nordic IP network. The international wholesale business operates with very slim margins and requires very high traffic volumes to be profitable. TDC will attract more traffic to its Nordic IP network.
• Market Impact: Low on the Nordic wholesale market, where TDC’s international network presence has for long been much smaller than Telenor and TeliaSonera. Now, TDC has opted for a vanilla IP solution and left the more sophisticated vertical market wholesale needs to TeliaSonera.
Recommended Competitor Actions
• All the global operators on the Nordic business market (i.e., AT&T, Verizon Business, BTGS and Orange Business Services) can point to TDC’s loss of control over its global traffic delivery capability and the company’s clear strategy involving the unwinding of its international presence.
• Competing Nordic operators Telenor and TeliaSonera can point to TDC’s action as yet another retreat from credible international presence. TDC is fast becoming a local player with only credible Nordic presence, whereas both Telenor and TeliaSonera maintain very credible international wholesale operations.
• TeliaSonera can also emphasis its ability to serve specific vertical industry wholesale services (finance, gaming, research, etc.) on its own infrastructure, whereas TDC is now left with a vanilla global network service over which it has little control.
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Competitive Positives and Concerns
Recommended Vendor Actions
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