Pannaway acquiring TelStrat access division

Pannaway Technologies took a big step today in its efforts to grow the company and its market share in the access market by announcing it would acquire the Access division of TelStrat International through a cash and stock transaction.

TelStrat was the first company in North America to deliver 2.4 GPON-based fiber to the home from a broadband loop carrier platform. Pannaway, which had been developing its own G-PON technology, wanted to accelerate that development and will acquire TelStrat’s Inteleflex product line instead.

“We really want to get a foothold in this market place, and we know growing organically would take too long,” said Kevin Brown, vice president of marketing. “So this is a way for us to grow and protect the customers’ investment by carrying on development of Inteleflex and cross-pollinating it with our own product line.”

TelStrat’s Inteleflex broadband loop carrier platform enables telecommunications providers to bridge circuit-switched and emerging packet-based networks to deliver converged voice, video and data communication and entertainment services.

The acquisition is expected to close by the end of this month and will grow Pannaway’s customer base to more than 300 Tier 2 and Tier 3 service providers and municipalities.

“In a marketplace with about 800 ILECs, that’s about 40% market share and that’s just below Calix, which is significant,” Brown said. “Also, we wanted to get more coverage out in the street with sales people and techs. It’s pretty hard to serve rural customers without a lot of feet on the street. Now we’ll be doubling our territory and be out there to help customers more often.”

Both companies’ products are based on similar technology, including Broadcom ship sets, so the integration should be a smooth one, Brown said. Pannaway will now have three density levels of product: the high capacity MAGNM-20 chassis, the medium capacity Inteleflex chassis, or the award-winning stackable Broadband Access Switch family.

Bob Carroll, founder and CEO of TelStrat, has joined Pannaway’s board of directors and according to Brown will be an active member. “He has good influence and leverage in the market and we will leverage that. We are excited to have him sitting on our board.”

Also, Sid Schmid, formerly GM of TelStrat’s telecommunications division, will become Pannaway’s executive vice president and will lead the integration efforts. All other employees associated with the access products will become Pannaway employees and remain at TelStrat’s location in Plano, Texas.