Telindus Grows Stronger in Dutch Market with ICT Acquisition – ‘Let Op KPN!’

On April 13th Telindus acquired ISIT BV, a provider of data storage, archiving, business continuity and disaster recovery solutions.

Recommended Competitor Actions

► Service providers and system integrators should take notice of this acquisition, as it could be part of a wider strategy to enter the Dutch market not only to support its existing customers, but also to gain market share that it might be willing to ‘buy’ through aggressive pricing. Having a leading position in Belgium and Luxembourg, the Netherlands could be the next ‘strategic’ market where it is willing to invest for growth.

► KPN should take aim at the Telindus acquisition by stressing that it can provide a full range of managed services for corporate customers in the Netherlands (and globally). I

► The incumbent should also consider making similar acquisitions to strengthen its national and regional presence. This trend is happening across Europe. This week alone, Dimension Data sold off its Swedish operations to TeliaSonera. The boundaries between carriers and system integrators are blurring. The business model is moving from tacit cooperation to direct competition. BT, Belgacom and France Telecom have been adapting to this change through acquisitions. KPN should consider the same tact to gain more ICT budgetary spend and increase customer stickiness.

AT&T Announces Plans to Take Control of Telecom Italia

On April 1st AT&T announced that it was in negotiations for a potential indirect investment in Telecom Italia. The proposal is for AT&T to purchase a one-third stake in Olimpia S.p.A., a holding company with approximately 18 percent of Telecom Italia’s ordinary shares.

Recommended Competitor Actions

► Competitors should point out that the present investment is not an investment in the carrier, but merely a transfer of shares between shareholders. There is no improvement at all to TI’s financial or commercial position.

► The other members of the FreeMove Alliance must reassess the goals of their mobile alliance and decide what to do if they get a cuckoo in their nest. One course of action is to exclude TI Mobile, or prohibit any AT&T services on the FreeMove platform.

► Competitors on the Italian market, notably BT and Fastweb should consider the possible legal repercussions of the dominant incumbent being taken over by AT&T and bring this forcefully to the attention of the Italian telco regulator. They should insist that domestic FMC services be unbundled and made available to all competitors and furthermore that the infrastructure b e split off from the TI group.

► Verizon Business is hardest hit by this AT&T move (if it succeeds). The response could be along the lines of organic growth versus acquisitions. The highly integrated Verizon Business European network with its excellent VBCC customer portal represents a level of integration that will be hard to achieve for AT&T when it has to assimilate the TI services and infrastructure.

Recommended End User / Customer Actions

► Wait and see! This is still only a declaration of intent. Whatever happens, it will not be detrimental to contract relations as they exist today. European contracts being negotiated with either TI or AT&T could forthwith include a clause ensuring that the customer gets the best SLAs emerging from any joint venture – if it happens, and ensuring customers the freedom to choose how and when they want to avail themselves of a joint AT&T-TI service offering.

► Just the threat of a new strong pan-European alliance between AT&T and TI can be used by customers to negotiate slightly more favorable terms from competitors anxious to close deals before the AT&T-TI issues are fully resolved.

► Customers with significant connectivity needs in the Mediterranean region and North America now have the contours of a very strong service offering. They should hold back and wait for a clarification before contracting for services.

BT Buys Comsat to Improve Latin American Presence

On April 20th BT acquired Comsat International, a provider of data communication services for corporations, carriers and the governments in Latin America. This bolsters BT’s global reach and its ability to deliver complex projects and manage network solutions. Comsat International employs 700 professionals and provides services directly in 15 countries.

Recommended Competitor Actions

► The strongest global operator in the region is Telefonica, with extensive fixed and mobile services and a strong Latin American infrastructure. Telefonica should emphasize the limited, data-only focus of Comsat and the inability of BT Global Services to deliver integrated mobile services throughout the region.

► The other major Pan-American operator is Telmex/America Movil which also can emphasize the limited scope of the Comsat offering and the out-of-region management of the Latin American BT Global Services. As regards the ability to provide global services, Telmex can point to its alliance partner, AT&T.

► AT&T, in alliance with Telmex in Latin America, has a strong direct and indirect presence across the continent and can use its infrastructure plans for Ethernet in Brazil and Argentina and NNI agreements in Brazil and Central American countries as proof of its deep commitment to enterprise services in the region.

► Global Crossing can emphasize the increased data center capabilities (15 data centers in seven countries) that it will be adding once the Impsat acquisition is complete.

Recommended End User / Customer Actions

► MNCs in Europe with Latin American operations should re-evaluate the BT GS proposition for faster, all-location connectivity and globally consistent service availability. However, they should explore carefully how BT plans to integrate its different networks in the region, as well as what end-to-end SLAs BT can commit to.

► Customers with significant business continuity and resilience requirements in the region should also explore the BT Comsat offering, but carefully identify, cost, scalability and bandwidth constraints.

► Customers with roaming wireless or WiFi access needs in Latin America should focus on Telefonica and America Movil offerings, as this is not addressed by this BT acquisition at all.