Ramtelecom Inc., a Canadian satellite communications provider, announced this week that it will be acquired by SkyPort Global Communications — and at least one industry analyst sees this as a positive sign for the telecom industry.
The two companies enetered into a letter of intent according to which Houston, Tex.-based SkyPort will puchase all of its common shares for $0.60 per common share, payable in cash. Optioned shares will be purchased at $0.10 and outstanding warrants of the corporation will be purchased at $0.04 per warrant.
Pending agreement by the shareholders, the deal will be finalized on April 23, 2007.
The two companies “have a lot of synergy,” said Ralph Misener, the president and CEO of Ottawa-based Ramtelecom.
“We were looking for ways to expand into the U.S. space.” There’s a lot of consolidation happening in the telecom market right now, he said.
The deal will benefit Ramtelecom’s customers, he said, by providing them with a solid North American network.
The deal wouldn’t lead to any layoffs or reduction in product offerings, Misener said.
“It expands our product offerings . . . Our product base is going to increase rather than decrease. We’ll start to gain employees on the sales and marketing side.”
But Roberta Fox, a senior consultant at Fox Group Telecom Consulting said in the short term there might be some sales and service staff consolidation — which means customers might have to deal with a new account person or service technician. The billing procedures might change as well, causing small bumps.
But overall, she thinks the merger should go smoothly as the two companies have similar cultures. The combined company will have a bigger customer base and broader portfolio. “So this is a way to grow bigger, broader, faster.”
The consolidations in the telecom industry – both in the facilities side and the managed services space – are being driven by a quest for a larger customer base and market share. Larger firms are buying smaller ones in order to access their customers and enhance their services and overlay, she said.
But competition is still strong in the sector, with some acquisitions actually driving competition, when, for example, a facilities company buys a managed services company and then enters that space.
The emphasis on wireless is also increasing competition in the last mile space, she said.
“I think this is the start of consolidation,” she said. “What’s also driving consolidation is access to capital and that’s a good sign, which means the markets are financing deals, whereas for the last few years they haven’t been. So I see that as positive for the telecom industry. And consolidation also brings new services.”