Uniserve has become a buyer to expand from coast to coast

Vancouver-based Uniserve Com-munications Corp., one of Western Canada’s largest independent communications companies, has further extended its reach across the country by acquiring Inter.net Canada Ltd. of Montreal, only a year after it acquired Alberta’s Interbaun Communications. The high-speed Internet, VoIP and long distance provider assumes Inter.net’s network and, perhaps more importantly, its customer base in Ontario and Quebec. Uniserve’s president and CEO, William Spratt, said the acquisition "is part of our strategy to link together the high speed telephone, cable and wireless networks across Canada, and deliver an exciting mix of new Internet based technology services to Canadian consumers and small businesses," in a news release issued February 1. Given the nature of the Internet telephony and broadband market, expansion through acquisitions is the obvious play. Brian Sharwood, an analyst for SeaBoard Group, says the low barriers to entry in the VoIP market guarantee a lot of smaller players, which inevitably leads to acquisitions from above. "If they’ve got cash and they want to buy other customers, they’re going to go and look at some of these smaller players who are probably willing to be bought out," Sharwood tells Network Letter. "You kind of have to separate your product out and go after a niche market, or you have to get a customer base and get acquired." Indeed, for the start-ups that may be prepared to be acquired, their key asset is not the quality of their service, but rather their customer acquisition ability. In the case of the Inter.net purchase, Uniserve increased its customer base from approximately 70,000 small and medium sized businesses and consumers to more than 110,000, along with becoming a coast-to-coast provider; its offerings are now available in all 10 provinces, with service centres in Vancouver, Edmonton and now Montreal. The company also increased its network capacity in Eastern Canada, which will boost its wholesale VoIP capabilities. Uniserve is expecting this new group of companies to generate annual revenues of over $24 million. While any future expansion plans for Uniserve are unknown, the opportunity is there. Sharwood says that in spite of the availability of smaller companies, there aren’t a lot of buyers in the market. This situation has already allowed Uniserve to grow from having a presence in Western Canada to become a consolidated national full-service communications company within the course of a year, and will afford them ample time to examine other options as they aren’t in an acquisitions race. "It’s more that is taking it on an opportunistic basis," says Sharwood. "With small companies sometimes it’s just personal relationships. It’s like, do you get along with the people you’re going to buy and do you want them on your team?" Uniserve announced that former Inter.net president, Sophie Leger, will be staying on as Uniserve’s new COO. Said Leger: "This is a tremendous opportunity for both companies as we share the same vision for future growth; a vision of lifting innovation and convergence to new heights in our industry." Although Inter.net certainly seems pleased with the consolidation, being part of a roll-up strategy is not what every small communications provider desires. Sharwood has seen small companies form in a community, establish a loyal base of a few thousand customers and resist the temptation to expand or be acquired. A few owners with some knowledge can keep a company moving into the most recent technologies – dial-up, high-speed, VoIP – thereby retaining its subscribers and maintaining the operation strictly as a job. "When it’s businesses that size a lot of it is kind of personal decisions," says Sharwood. "What do you want to do with your life? Do I want to sit and sort of paddle away here or do I want to get acquired and probably laid off and have to do something else?" The business prospects of Inter.net improved substantially earlier this year when the CRTC ordered Bell Canada to reduce by 50% the rates charged to competitors for wholesale access to DSL. Last November Inter.net led a coalition of independent ISPs in Quebec fighting what it considered unfair wholesale rates charged by Bell (NL, Dec. 8/05). At the time, Léger explained the rates being levied by Bell against competitors made it virtually impossible for small non-facilities-based companies to compete against the much larger provider. She succinctly illustrated the problem, noting that the wholesale DSL rate charged by Bell was $20.50, yet Bell’s retail rate was $19.95.

Uniserve has become a buyer to expand from coast to coast

News | 03/07/2006 5:00 am EST

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