Big is beautiful
AFTER PREVIOUSLY largely ignoring the security side of the telecommunications industry, behemoths such as Verizon Business, AT&T, British Telecom (BT) and South Africa’s Telkom are now determined to obtain a foothold in this increasingly lucrative sector.
“Consolidation” has over the past two years been the buzzword in the industry. Telkom had its bid for technology group BCX vetoed by South Africa’s Competition Tribunal. BCX has an entrenched presence in SA’s services and consulting space.
In Europe, BT last year won a bid for managed security service provider Counterpane in a strategy it hopes will improve its appeal in the network security sector. However, Verizon – its US telecoms group – caught the industry off guard with its recent acquisition of Cybertrust, one of the leading independent security service providers.
While industry observers may have perceived Cybertrust as an acquisition target, Verizon’s involvement came as a surprise. Verizon already had several managed security services (MSS) acquired through the acquisition of MCI and operates mainly in the IP, data, voice and wireless space.
As with every acquisition, shareholders and industry observers have been keen to know the possible synergies and benefits that Verizon will gain from its tie-up with Cybertrust. Outlining the benefits of the Verizon/Cybertrust deal at a recent media forum held in Britain, Verizon vice-president and chief marketing officer Nancy Gofus explained that the deal had given it a global reach that its clients – particularly those in Asia and Europe – had been looking for.
Gofus said the tie-up aims to build value-based strategic partnerships because, prior to acquiring Cybertrust, Verizon lacked capabilities such as forensics and identity management.
The deal now enables the combined company to target major enterprises worldwide (including government agencies) and adding security capabilities – such as computer forensics and identity management – to its current range of firewall, antivirus and anti-spam offerings.
And given the growth in the value of electronic security globally it’s hard to resist the temptation of joining that sector. Research group IDC values the electronic security industry worldwide at more than US$30bn/year. But if you factor in other security services, such as guards and fences, the industry’s value swells to $100bn/year.
“The deal exposes Verizon to additional security operation centres in Europe and the Asia Pacific region, enabling the company to augment those inherited from the earlier tie up with MCI,” Gofus said.
“And Cybertrust’s resources will also improve Verizon’s ability to serve clients that require a global presence for MSS, consulting and identity management services,” added Fred Briggs, Verizon vice-president in charge of network operations and technology.
With the next big race among telcos in the US and European markets being the use of cellphones as a replacement for credit cards, Briggs is optimistic that the Verizon/Cybertrust deal will prove strategic.
Could Verizon’s flirtation with high value US and European corporate establishments lead it to neglect its other business units, particularly in Africa, where its footprint extends from SA to Botswana, Namibia, Zambia and Kenya, with voice, data and Internet services being its biggest offerings?
Gofus was quick to dismiss that notion, saying that Africa – particularly SA – was firmly on the group’s expansion radar screen. “Growth in each of our markets worldwide is being driven by different factors. In Europe, corporates were the key growth drivers, whereas in SA SMEs were the major drivers of growth.”
However, Gofus said the challenge is that the current incumbents were firmly entrenched in that space. “And they don’t seem prepared to give up their playing ground.”
Managing more than 3 600 networks in 149 countries, including overseeing more than 25 000 non-Verizon business connections, Verizon owns and operates one of the most expansive IP backbone networks in the ICT industry globally. Its data network includes more than 446 000 route miles, including terrestrial and undersea cable, spanning six continents.
Said Gofus: “Our objective is to become the premier communications partner to enterprises worldwide. And the acquisition of Cybertrust is just another step in meeting that objective.”
Finweek
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