Last month, MTS Allstream Inc. acquired Markham, Ont.-based Delphi Solutions Corp. for $15 million. The deal sees the telecommunications systems provider become an operating unit within Allstream.
“[Delphi] has a dominant position in the IP telephony market, which outside Manitoba, we only have a limited reach. Now we have coverage across Canada in this fast growing space,” explained Dean Prevost, executive vice-president of customer operations and service delivery for Allstream. Delphi has over 20,000 customers across Canada.
Other reasons why Allstream pursued Delphi included the latter’s presence in the enterprise and mid-market space and Delphi’s unique set of offerings and capabilities which will round out and extend Allstream’s product line and portfolio, Prevost said.These include IP equipment and installation, configuration, service and maintenance capabilities.
One analyst said the deal is good for Allstream, as one of the company’s main goals was to a acquire a firm with systems integration capability.
“One of the biggest issues [that] somewhat hindered Allstream’s progress was their Customer Premise Equipment (CPE) expertise,” said Ronald Gruia, program leader, enterprise solutions for Frost and Sullivan in Toronto. “Delphi will definitely fit that to a tee. [It] will automatically give them a large install base for them [Allstream] to migrate those customers over from legacy PBX infrastructure to IP and sell them network and application services as well.”
For Delphi’s president, Ed Lavin, the deal was the fruition of a plan put together many years ago.
“We started to do a partnership with Allstream and over the years that has grown to a point where we both recognize that the companies should be brought together because we can go in as one and really embrace the client on a uniform scale,” Lavin said. Now that the two firms are one, Lavin said customers of both Delphi and Allstream only have to deal with one entity instead of two.
“Both medium-sized and large-sized clients want simplicity…and not deal with three different invoices from three different people. We feel that we will be received…coming out of the box much firmer and harder with offerings that are uniform across the entire country.”
Lavin sees more consolidation of this type happening in the marketplace and said his company is just responding to this natural evolution. Gruia said the deal is also good for Delphi as it opens a few more doors for the firm. By becoming part of a service provider, he added, Delphi can now expand its addressable market.
In terms of the competition, Gruia said acquiring Delphi adds some cachet to Allstream, making the provider a much stronger player to compete with large enterprise accounts.