Cincinnati Bell eyeing acquisition opportunities for out of territory unit

Cincinnati Bell said if it pursues any acquisitions in the near term, it would focus on finding assets that could complement the telco’s out-of-territory Cincinnati Bell Technology Solutions (CBTS) division.

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Leigh Fox, President and COO of Cincinnati Bell, told investors during the recent Morgan Stanley Leveraged Finance Conference that while it continues to talk with other providers, it has not acted on a deal yet.

“The out of territory business is growing at a pretty aggressive clip and everything we are doing here is organic,” Fox said. “We have mentioned in the past we’re looking at potential M&A and most of the M&A we’re looking at is in this space because it’s fragmented so the opportunities that present themselves are a lot greater.”

As its out-of-territory network operation, CBTS has three main offices: Columbus, Ohio; Louisville, Kentucky; and Indianapolis.

By acquiring another company for the CBTS division, which focuses on areas like cloud and network management, is easier is that the service provider could easily tuck the asset into its fold.

What makes the CBTS division different than its parent acquiring fiber is that it does not need to have fiber assets that are adjacent to its own existing plant.

“Unlike the network business where it’s hard to find networks that are of a certain size that are contiguous to your footprint,” Fox said. “We can find a lot of companies of various sizes that could fit right into the business and we have a lot of conversations.”

Fox added that since it has cleared its balance sheet it wants to take its time in pursuing any acquisition.  

“We’re not pulling the trigger often or at all yet, which just means were being smart about it” Fox said. “We’re in no hurry to be spending money again, but we understand what growth needs to look like and we’ll be patient about our investments.”

CBTS has continued to see success in attracting multi-site enterprise customers that have complex service and support needs, particularly for managed voice and cloud services.

“One of the exciting pieces here is cloud-based services and I think that’s where the integration into the network expertise that we have on the network side of the business combined with the IT solutions business comes in handy,” Fox said. “If you think about what enterprise customers want today -- they want to be ale take advantage of public clouds and private clouds and a lot of that has to do with networking.”

Fox added that the Unified Communications segment is one area where CBTS is finding success in serving.

“Unified Communications is a growing segment because people don’t want to own voice if you’re a business,” Fox said. “We’re seeing a lot of growth in that space.”

The service provider was selected in April to be the exclusive managed voice provider for the State of Indiana in a contract award worth about $10 million.  

As the prime contractor for the State of Indiana’s managed voice network, CBTS will oversee the delivery and operations of IP-based Voice as a Service including desk sets and softphones for stationary and mobile users, and toll-free and long-distance services. 

CBTS can leverage the expertise and assets of its Telecom & IT hardware division, including network monitoring, professional services and management.

Cincinnati Bell reported that its Telecom & IT hardware division reported $123 million in revenues, up 5 percent from the third quarter of 2015. Strategic revenues were $51 million in the third quarter, up 10 percent compared to the prior year. Telecom & IT hardware revenue was $66 million, up from $65 million in the prior year.