Telco Consolidation Part I – Less is More?

M&A activity is not uncommon to the telecom industry, but in the past couple years, there have been some major players coming together. Here is a sampling of some of the more major Tier 1 and Tier 2 M&A announcements from the last two(ish) years:

• CenturyLink acquisition of Level 3
• Verizon acquisition of XO’s fiber business
• Charter, Time Warner Cable, and BrightHouse merger
• Verizon select services sold to Frontier
• Windstream acquisition of Earthlink (and recently announced Broadview Networks)

While your organization is likely to be affected by these changes in the market, there are some key areas that can be proactively addressed to prepare for the changes and mitigate potential negative impacts. Part I of this series will focus on the account-level and billing aspects that are likely to be affected:

Customer Service: If you do not have an assigned account rep or account management structure in place with the acquired and/or acquiring carrier, you may experience some level of run around while services and accounts are in transition. When Verizon sold select services to Frontier, I worked with clients who were stuck in a cycle of customer service where Frontier did not yet have the account on file, but Verizon was no longer servicing the area, leading to a lot of frustration. Work with the carriers to proactively determine customer service transition dates and push for new account numbers and to ease some of this back and forth.

Account Management: Be aware that different carriers stratify their customer accounts in different ways with unique definitions for the level of scrutiny and account management for each type of customer. Certainly the aim/pitch from the carriers would be that your quality of account management will improve with any merger/acquisition, but do consider where your company, spend, and services fall in terms of priority for the acquiring/consolidated supplier. For example, you may have been 2% of the revenue at a smaller carrier, but only .2% or less once you combine multiple carrier revenue streams. Talk with your account rep to understand where your account falls in terms of a defined customer group and the impacts to your account management structure (for better or worse).

Billing/Reporting: You may be rejoicing at some of the M&A announcements and assuming that your company’s billing and reporting will now be consolidated between suppliers who are now one entity, but don’t expect too much, too soon when it comes to consolidation. You are likely to see separate billing systems, reporting platforms, account codes, etc. for quite some time. There are certainly still vestiges of carrier consolidation from many years ago – your best defense against this is to have a well-managed telecom inventory and a billing/compliance tracking system in place so that as changes occur, you are able to make necessary updates and address changes as needed with the carriers.

Pricing/Flexibility: Certain carriers are known in the market for being more competitive from a pricing standpoint than others, so while you may benefit from larger footprint and less administrative burden (eventually), there’s likely to be a trade off when it comes to price. Similarly, smaller carriers tend to more flexible in their offerings and ability to respond to customer needs. Not to say that this flexibility will completely go away, but for those who are used to dealing with the more rigid processes or slow turnaround times associated with the larger carriers, it can be long process to get agreements negotiated or to resolve billing issues. By leveraging existing pricing you have in place and taking a strategic sourcing approach to telecom services, you can continue to push your carriers to remain competitive and tailor services to your organization’s needs.

Of course the positive part of market consolidation should be that top suppliers are expanding their footprint, increasing their suite of services, and pushing for more creative solutions to differentiate themselves. In Part II of this series, we’ll look at the potential service/logistics impacts of carrier consolidation and how it may affect your organization and services; until then, continue to watch the market, look for these announcements, and position yourself for change!