There has been a lot of focus in the UK telecoms market on what might be variously termed ‘big three’ players: that could be the three fixed-mobile converged service providers (BT-EE, Virgin Media O2, and Vodafone), or it could mean the three main infrastructure players (BT/Openreach, CityFibre, and Virgin Media O2).
Guess what… there are other significant players out there. For example, Daisy Group just acquired XLN for a reported £210 million, forming what it claims to be ‘the second-largest SME telecoms provider in the UK’ with over 200,000 customers and with revenues of over £200 million, which is by no means small change. Previous Daisy acquisitions include its £165 million deal to take over Alternative Networks.
Chess is another serial acquirer, having bought over 100 companies to create a business with over £100 million in turnover – although its acquisition strategy is currently ‘on hold’ to maximize cash generation.
And these represent just two of the larger independent challengers – there are literally hundreds more.
Hundreds of telecoms challengers
More often than not, these ‘marzipan layer’ service providers piggyback on infrastructure providers, and are instead focused on their customer service portfolios: often price-driven, but also with a growing portfolio of ‘next-gen’ services such as cloud, security, mobility, hosted applications, SD-WAN, and Unified Comms solutions.
The other advantage they have over their fixed-mobile convergence and ‘digging up the pavements’ competitors/partners is that their focus for survival and growth is on their customer proposition – smaller businesses as a rule don’t care much about technology – they just want reliable propositions that help them grow productivity, win new business, keep existing customers loyal, attract new customers, and keep costs under control.
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One notable aspect of ‘marzipan layer’ service providers, which have grown through multiple acquisitions, is that they reach an adolescent stage where their strategic focus has to adjust to their increased size. This means that operational issues, post-integration, become a priority as they consolidate, automate, and simplify systems, processes, platforms, and organizations.
Either way, two prominent UK ‘marzipan layer’ ICT services companies generating over £300 million in revenues between them is not too shabby.