Birch CEO: More acquisitions in the works
The competitive carrier buys Cordia assets, its 12th purchase since 2006
Birch Communications’ acquisition of the assets of competitive carrier Cordia announced yesterday is the twelfth the company has made since 2006—and it’s unlikely to be the company’s last.
“We expect to announce others shortly,” said Birch Communications President and CEO Vincent Oddo in an interview.
The Cordia acquisition was made possible by a combination of excess cash flow and debt financing provided by a group headed by Bank of America, Oddo said. The acquisition is only the second Birch Communications has made since it obtained the Bank of America funding. The previous 10 were all funded from cash flow and out of the pockets of Birch Communications’ three owners—Oddo and two others.
“We got on board early and proved we could do it,” said Oddo. “It was painful initially.”
Oddo and his partners were able to get the funding from Bank of America because “we had proven we could extract profits from acquisitions,” Oddo said.
A unique heritage
Oddo and his partners got into telecom back in 1996 when they created competitive local exchange carrier Access Integrated Networks—a company that survived the telecom crash around the year 2000 in no small part because, unlike many CLECs, it was not backed by a venture capital firm looking to quickly enter and exit the capital-intensive telecom market.
One of Access Integrated Networks’ biggest acquisitions was Birch Telecom, a CLEC that was not so fortunate but instead went through two bankruptcies (CP: Birch Telecom files Chapter 11, CEO resigns).
“We were smaller than Birch when we acquired them but we were financially stronger,” said Oddo.
In 2008, Access Integrated Networks changed its name to Birch Communications.
In considering other telcos to acquire, Oddo said he looks for companies that fit what he calls a “tuck in” strategy. By that, he means companies that have similar service offerings and similar geographic coverage to Birch, which now offers service in 38 states, focusing on voice and Internet services for small- and medium-size businesses.
In addition, Oddo said, “We look for assets where the company had a reputation for having provided good service and we look for a good gross margin. We have a great platform and a great company and once we bring them in, customers will enjoy us even better.”
It’s a buyer’s market for telecom companies today, Oddo said. “We’re in an economic environment that’s helping to shake out players,” he said. Not only are companies finding it difficult to raise revenues in a challenging economic environment, some also are having difficulty obtaining funding, he said.
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