ITC^Deltacom merger transition includes cost, job cuts
ORLANDO – ITC^Deltacom executives, in the wake of the company’s merger with BTI Telecom, provided at the Competitive Telecommunications Association conference here the first glimpse of what the combined company will look like. The good news is that the company expects annualized cost savings ranging from $40 million to $60 million within three years, primarily due to the consolidation of redundant facilities. It anticipates reducing its costs by $28 million to $42 million in the first year.
The bad news is that about 500 employees will lose their jobs. Not all will come from the former BTI, said Andrew "Drew" Walker, the former chairman and chief operating officer of ITC^Deltacom, who became president of the new company’s business services division. "We’re going to keep the best people," Walker said. In the end, the combined company will have 2000 to 2100 employees.
Some BTI workers will be offered the opportunity to relocate to other facilities. Those who aren’t retained will be offered a transition period for several months; should they finish the transition, they will be paid a bonus equal to 25% of what they earned during the period, said Walker. Safe for the moment are BTI ordering personnel. "They know the BTI system and could turn out to be the most important people to our customers," Walker said.
While some employees will migrate, customers will not. Walker said the combined company – which will operate under the ITC^Deltacom brand – plans to operate BTI’s network, which utilizes Alcatel 600E digital switches in its three network operations centers and 14 Lucent 5E 2000 local switches throughout the Southeast. While transitioning the BTI network to ITC^Deltacom’s platform that utilizes Nortel DMS digital switches would require significant capital, Walker said the key driver behind the decision is a desire to avoid alienating BTI customers. "The idea is not to disturb the customer unless you can provide a new feature or service, or meet a new requirement they have," Walker said.
Several facilities will be consolidated. For example, the company will be based at ITC^Deltacom’s headquarters in West Point, Ga., with sales offices from both companies moving into BTI Telecom’s former headquarters in Raleigh, N.C.
ITC^Deltacom acquired BTI Telecom for $132 million, which included the assumption of $110 million in debt and $20 million in common stock. ITC^Deltacom also received a $35 million equity investment from Welsh, Carson, Anderson & Stowe. One of the keys to the acquisition was BTI’s fiber routes, which will allow ITC^Deltacom to close some coverage gaps, said Walker. ITC^Deltacom also picked up 30,000 new customers, another key. The combined company will operate in 40 markets and serve more than 50,000 customers.
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