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Sprint to Sell its Conferencing Business?
Sprint has been rumored to be selling its conferencing unit for some time now, but the rumors have reached a fevered pitch over the last month, with Elliot Gold breaking the story recently in TeleSpan. According to TeleSpan's initial report, West will be acquiring Sprint Conferencing very soon, closing down the Kansas operation, and absorbing all of Sprint 's customers. We contacted Sprint to give them an opportunity to clarify the situation, but at the time (Friday, Feb. 4 at 1:20pm) of this writing no communication has come from them.
What does appear to be the case is that Sprint is in current negotiations with an officially unnamed buyer to sell its conferencing business, in some form or fashion. If Elliot Gold of TeleSpan is right in his new report released today however, Sprint seems to want its cake (cash) and eat it too (keep its customers).
Reputed to be a very profitable business unit with its carrier cost structures, immeasurable inter-company benefits, and mature billing and network infrastructures, Sprint has been one of the price leaders over the last several years. Outside of these carrier cost structures and integrated infrastructure, it is unclear how the unit will perform financially in the hands of another operator. It is hard to imagine that a buyer would pay very much for the business if it doesn 't "own" the customers and control its own brand. And if Elliot Gold from TeleSpan is right that the sale price is as much as $180 million, the buyer would be breaking all the recent M&A valuations if the cash is simply for the right to "outsource" conferencing services and never gain outright ownership of the customers.
One of the early pioneers in conferencing and a leader in automated conferencing, Sprint was at one time ahead of AT&T and MCI in this high profile business service. It is unclear why Sprint wants out, particularly as SBC looks to inherit one of the industry 's largest conferencing client-base from AT&T. It is also unclear what value-added services would be left at Sprint to bind their enterprise customers to Sprint Business Services if they are selling off value-added integrated services such as conferencing.
From the buyer 's perspective, the biggest concern has to be the impact on Sprint 's customers, particularly those that are buying conferencing as part of the Sprint brand in a bundled environment. For all Sprint conferencing customers - if this service were to be snapped off the Sprint brand a sale would seem to be a great time to do a little price shopping. After all, whoever the buyer, they have been re-pricing their own customers over the last 12 months, and a change of vendors begs for a new look at price.
This once fragmented industry continues to consolidate and it would seem that the SBC /AT&T combo will be very hard to compete with, both for enterprise customers in general (advantage: integrated offering) and for stand-alone conference calling (advantage: bundled pricing).
More to come as the story unfolds!
February 4, 2005
