BroadSoft Buys Into British Cloud
BroadSoft Inc. has expanded its cloud platform capabilities and market reach, albeit in a small way, with the acquisition of British hosted unified communication system specialist Hipcom.
The move will enable BroadSoft to offer its hosted BroadCloud PBX service to UK communications service providers (CSPs), which can then use it to offer a range of unified communication services to their business customers.
Financial terms of the deal were not disclosed but BroadSoft noted that Hipcom, which offers its hosted services using its new parent's BroadWorks software, will add about US$1.6 million to its 2013 revenues, putting its annual revenues run rate at about $4 million. The company provides it services currently to specialist business service providers, systems integrators and even the wholesale division of BT Group plc. (See Hipcom Uses Broadsoft.)
Most of Hipcom's staff, about 35 employees, will join BroadSoft, though CEO Allan Murdoch and some administrative staff are not being retained.
The deal is not about the impact on BroadSoft's top line, though. The company is keen to position itself as the leading supplier of hosted (cloud) software systems that can be used, on a white label basis, by CSPs that are looking to offer unified communications (voice, multimedia messaging, collaboration tools) to their business customers without having to invest in their own platforms.
BroadSoft claims its BroadCloud PBX service has proven popular in the US, where it also boosted its opportunities with an acquisition, and cited increasing use of its hosted unified communications platform as one of the reasons for its 9 percent year-on-year uptick in second quarter revenues to $44 million. (See BroadSoft Reports Q2 Loss of $3M and BroadSoft Acquires Adaption Technologies.)
And at least one analyst thinks there's plenty of sales growth to come from the hosted unified communications (UC) services sector. "We expect that the Hosted PBX market will continue to grow significantly over time and become the dominant technology for enterprises using PBX and UC functionality," noted Jefferies & Company Inc. analyst George Notter in a recent research note. Notter and his team believe BroadSoft will become a much bigger company and derive a great deal of revenue growth from an uptake of hosted unified communications services.
The acquisition of Hipcom looks like BroadSoft's way of accelerating its sales potential in the UK as it ramps up its European presence. And investors clearly like the idea, as BroadSoft's share price is up by 1,6 percent Tuesday to $31.85.
But of course, if it does extremely well, that might just make BroadSoft more attractive as a takeover target itself. (See M&A Mayhem: Who's Next for Oracle?)
— Ray Le Maistre, Editor-in-Chief, Light Reading