Independent telco Warwick Valley Telephone (WVT) will buy Pennsylvania based Alteva, a cloud and hosted IP services provider, for $17 million. The combined cash and stock transaction has been approved by boards of both companies.
WVT plans to merge its existing CLEC and enterprise operation, USA Datanet, into Alteva, allowing the company to better capitalize on the fast growing unified communications and cloud services segments. It’s a pretty significant move for the Warwick, New York based telco, demonstrating the growing importance of the cloud on telecom carriers of all sizes. WVT has approximately 26K access lines and 100 employees.
“This is an extraordinary acquisition that will significantly contribute to our strength and momentum in the marketplace, favorably impact our highly skilled workforce and the services delivered to our customers, and, most importantly, support our mission to deliver value to our shareholders,” said Duane W. Albro, President and CEO of Warwick Valley Telephone Company in a press release.
Like most telcos who embark on the cloud services strategy, revenue diversification is a key motivating factor. In 2010, WVT counted 70% of its revenue from traditional telco revenues like local and long distance voice services, among other products. That revenue source is in decline, so the acquisition of Alteva hopes to help grow the other 30%. Much larger carriers, including TDS and Windstream, are very active with this strategy, making significant investments in their own cloud based assets.
Alteva, based in Philadelphia, offers cloud based communications services including VoIP PBX, unified communications on the Microsoft platform, and other IP enabled applications in all 50 states, with some international exposure as well. It greatly expands WVT’s footprint, literally and figuratively.