Now updated – interview with Atlantic Bridge Ventures partner Paul Harvey
That the consortium buying LogicaCMG’s telecoms division was headed up by Larry Quinn will not have escaped the notice of many in the wireless world.
Quinn has been this way before, when his company Aldiscon merged with the Dutch IT services giant in 1997. Quinn served as ceo of the merged company’s Mobile Networks division from that date until 2002. In 2001, the division had 1500 employees and revenues of €250 million.
Now Mr Quinn, or at least the money he represents, has bought the 1700 people, €378 million division for €392 million cash. That’s a figure 11.5 times its 2005 EBITDA, and 19.5 times the division’s 2005 adjusted operating profit. The company’s 2006 numbers were said to be “broadly stable” compared to 2005, in a 23 January 2007 trading update.
So what future does Quinn’s team see for the acquired division? First off, it will be renamed Acision, sticking to the now long-established tradition of Irish tech companies that begin with A.
And it looks as if one strategy will be to find other partners and channels to market, working with other systems integrators and services companies apart from Logica. The other strand will be to build away from the core text and MMS business (LogicaCMG SMSCs and MMSCs handle about 50% of this traffic globally) into “converging technologies.”
LogicaCMG has for some time seen itself as the natural platform for delivering merged IP services – such as unified messaging and communications, content and enterprise services. Acision’s management may well look to other tie-ups and partnerships that can see it exploit what it regards as its technical leadership in these areas.
Paul Harvey, partner at Atlantic Bridge Ventures, said that the deal represented “the return of the empire”.
“It’s not just Larry Quinn, it’s Gilbert Little, Jo Cunningham, the founders of the SMS industry whose Aldiscon platform formed the messaging platform for CMG. These guys are so passionate about messaging and getting more people to use and send messages.”
Harvey said that the company intended to use other SI relationships to open up other markets, such as Russia and the USA, where LogicaCMG has not done so well.
As for acquisitions of other companies, Harvey acknowledged that there may be other comapnies out there with technologies they have not been able to market because of the strength of LogicaCMG’s operator relationships.
“They [Logica] have systems that provide the service that provides the most valuable equity stream for operators, so here is a real opportunity for expanding the reach and product offering within that customer base.”
As for the price Atlantic paid, Harvey said he thought the 4% increase in Logica’s share price reflected the “fair” price Atlantic had paid.
“I am so pleased to be owning this asset, we can do a lot with it and free up the business. Not that Logica managed it poorly, they just didn’t have the resources.”