Interoute Acquires Visual Conference Group in Pursuit of Video-as-a-Service Promise

| Mar 11, 2011 | Voice and Unified Communications Services
| Analyst: Joel Stradling

Event Summary

March 11, 2011 – Interoute has acquired Visual Conference Group (VCG) for an undisclosed sum. Sweden-based VCG (known locally as ‘Videokonferensbolaget’) provides managed telepresence and HD video conference solutions, with deployments including local support in 50 countries worldwide. VCG was founded in 2002 by former Tandberg employees and has eight offices throughout Scandinavia and is a Tandberg Platinum partner.

Quick Take

Analytical Summary

• Current Perspective: Positive on Interoute’s acquisition of VCG, because Interoute is consolidating its position in the pan-European multinational enterprise market. VCG strengthens Interoute's unified communications portfolio, which will drive sales and add immediate customer numbers and revenue to Interoute’s existing client base.

• Vendor Importance: Moderate to Interoute, because the carrier needs to identify lines of business that deliver better margins than raw transport. Any successful traction with telepresence will drive premium performance services with higher profit margins over the operator's networks. Interoute’s competitors in the multinational segment have been improving their video conference ranges for more than two years, and Interoute needed to catch up.

• Market Impact: Moderate on the pan-European telepresence market, because Interoute and VCG are regionally strong, however the impact is lower in the international market because Interoute and VCG have less presence and market clout in other regions, such as Latin America and Asia Pacific. Several global telcos have spent the past several years developing their telepresence strategies, including for example Tata, BT, Orange, Verizon and AT&T, and these operators can point to mature products, comprehensive reach including inter-carrier video gateways, and broader global operational presences.

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Competitive Strengths and Weaknesses

Response & Recommendations

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Analytical Perspective

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