Winners and Losers in a Dynamic Industry

I recently attended the Oppenheimer Technology, Internet and Communications Conference in Boston.  Talking with industry veterans and the investment community, it is very clear that the telecom industry will continue on a path of rapid change, and like any dynamic industry, there will inevitably be winners and losers.  As we see the growing trend of migration from computing on a local device to the cloud, players in this space will be challenged with how to grow, where to invest and speed to market.  Some quick thoughts on differentiators which will predict players that will succeed and those who will be challenged…

Communications service providers are playing an important role as more enterprises depend on high-quality, high-bandwidth networks to connect to both the public and private clouds.  Knowing how to integrate security, redundancy and reliability in both the applications and physical network is critical in today’s environment.  Service providers that own fiber assets and data center facilities along with the ability to sell and manage applications on the IP layer have significant advantage over non-facilities providers.  Owning fiber and network facilities translate to streamlined control, faster installation, and lower operating cost.

Companies vertically aligned with strong balance sheets, sector focus and a willingness to invest in infrastructure and applications are what will prevail in an increasingly competitive telecom marketplace.  With an experienced and enthusiastic workforce, Alpheus is well positioned to punch above its weight as it competes for market share in  Texas .

Another hot topic continues to be the capital markets  support  of organic growth, mergers and acquisitions.  With the broadband transport market still fragmented, consolidation is expected to continue.  Discussions on valuation and debt financing were focused on industry drivers — strong tailwind for bandwidth, growing demand for metro fiber, shifts from TDM/SONET services to Ethernet and of course, cloud solutions. I will be hosting a finance panel discussion at the upcoming COMPTEL Plus conference in Orlando – “Show Me the Money: Exploring the Market for M&As and Financing for Growth”.  I invite you to stop by and join our discussion and attend the conference on 9/23 – 9/25.

Scott Widham, CEO, Alpheus Communications