Small Canadian network equipment maker makes U.S. acquisition

A Canadian maker of network access and transport products for telecommunications providers and enterprises has bought a competitor to expand its way into the United States.

Toronto’s Bayly Communications said Monday it has bought privately-held Coastcom Networks of Alameda, Calif., which makes metro/access network solutions for connecting voice, data, and video services to public and private networks, for an undisclosed fee. Competitors include Nokia Siemens Networks, Alcatel-Lucent and Ericsson.

While the two companies make similar products, Bayly had stayed away from the U.S., concentrating on the Middle East and Mexico. But late last year company CEO and owner Robert Offley had to make a decision on U.S. expansion: open offices across the border or buy a company.

“We sell to about 50 different countries,” Offley said in an interview, “and ironically we didn’t do a lot of business in the U.S. We just developed some new products and saw opportunities to get those in the U.S. Combined with Coastcom’s products, it [acquisition] made perfect sense.”

Bayly, which is also a private company, makes SONET/SDH MSPP multiplexers, digital access cross connect systems (DAC), Ethernet routers and bridges, and network management systems. Over the years its customers have included Telus, Rogers Communications and British Telecom.

Coastcom makes a variety of CWDM ROADM, Ethernet over SONET/SDH, multi-service platform, IP-DSLAM, IAD and DAC solutions. Earlier this month it announced it had broadened its wireless product line to include the HotPort 6000 AutoMesh node and the HotPoint 4000 Access Point, both of which can be used either outdoors or indoors.

“We sell to a similar market space,” Offley said. “We both sell to utility companies as well as private telecom and wireless. So we approached them in the fourth quarter of last year. And it worked out fine.”

Offley wouldn’t divulge Bayly’s revenues, but did say that with the acquisition the company has grown by 40 per cent. Before the purchase it had about 70 employees. Much of its manufacturing is contracted out.

There isn’t much overlap in products, he said. “What they had is deep relationships with key customers in the government and utility markets that have been forged over 30 years. They also have some product that we don’t have for the utility market, both optical and TDM-over-IP equipment.”

On the other hand Coastcom lacks Bayly just-launched RMAC remote monitoring alarms and control solution for telcos and utilities, which integrates Ethernet switching, serial terminal server, control outputs and alarm collection inputs into one monitoring and control platform. It’s a product Offley thinks will do well in the U.S., where telcos and utilities run fibre optic cable across long distances.

Offley bought Bayly two years ago after having served as president and CEO of Fusepoint Managed Services, a Toronto provider of managed IT solutions. Prior to that he was the president and CEO of hosting services provider PSINet Canada. Coastcom will become a division within Bayly and keep its name.

Both companies have two-channel sales strategies, selling direct to telcos and utilities and through partners to enterprises. The acquisition “both consolidates and brings critical mass in both channels,” Offley said.

The RMAC system and optical multiplexers are Bayly’s hottest-selling products, he said. Remote management will be an area for new product development, as well as gear to help providers converge TDM and IP networks.

Another acquisition in the near future is not out of the question, Offley said, but more to gain new products rather than organic growth.

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