Monday, 07 February 2011 16:59

Telcoinabox to provide venture capital for franchisees to buy ISPs


Telecommunications franchisor, Telcoinabox, has committed to providing funding for its franchisees to make acquisitions of small ISPs and other micro-businesses in 2011. The seller of turnkey telecoms retail businesses to franchisees and service providers says it will help its retailers to grow through acquisition by providing venture capital and business broking services.

Acquisition targets will be small to medium telecommunications companies, in particular Internet Service Providers (ISPs), experiencing sluggish business growth and margin squeeze, according to Telcoinabox

Telcoinabox CEO Paul Line believes 2011 will be a year of expansion for the business.

'With consolidation of ISPs accelerating we see an opportunity for our service providers to acquire players considered too small for the larger ISPs to approach.' 

Telcoinabox has created a dedicated team to work on the initiative and has employed external business brokers to facilitate service providers' negotiations with potential takeover targets, the company says.

Telcoinabox will also provide the financing for deals.

'Devising innovative ways to build our service providers' businesses is important to both their wealth creation and ours. When they succeed so do we.

Our service providers are essentially entrepreneurs so it makes sense to play the role of 'venture capitalist' as well as infrastructure and product provider.'

A successful pilot of the strategy has already started, according to Telcoinabox, with the recent acquisition of Mobile Office, by Airlie Beach service provider Voice2net. A number of other acquisitions are currently under negotiation, the company says.  

Also in store for the business in 2011 is the launch of a new suite of pre-packaged data products.  Following the recently signed deal with Engin to provide VoIP and hosted voice services, Telcoinabox will extend its product suites to include web-hosting, remote back-up, anti-virus, VPN and net filtering services.

'Developments in data services' convergence and commoditisation mean it's critical we focus on the revenue and margin per connection that we can drive from additional services provided over the underlying network.  A further benefit should come from improved network efficiency and utilisation of unused capacity during off-peak periods.'

Mr Line adds that capitalising on its existing infrastructure is part and parcel of the company's strategy of being the 'one-stop-shop' for their customers, with the added bonus of a one-bill solution for a diverse range of products and services.

The first wave of off-the-shelf data products will be available in the third quarter of 2011.

In addition to acquisition and new product launches, the underlying thrust of the business plan for 2011 is to ramp up the number of Telcoinabox service providers.

The company currently has 110 service providers on its books and aims to add approximately 20 by the end of the calendar year.

'Our recruitment strategy this year is to reduce the current barriers to entry. Areas we're looking at include accreditation of our franchise model by the big four banks, vendor financing new franchisees and outbound targeting of specific niche markets, such as PABX suppliers and maintainers.

'We want to sell the benefits of owning your own customer base rather than being a dealer for another telco.

'Satisfaction management is our 2011 goal. We are in effect consultants to our service providers. When service providers are well equipped to grow their businesses then it's a win-win for everyone.'

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