Sonus has beefed up its IP voice system portfolio and accelerated its virtualization strategy with the $20 million cash acquisition of Richardson, Texas-based Taqua, a long-time developer of VoIP, voice-over-WiFi and VoLTE systems that have been deployed by hundreds of communications service providers.
Sonus Networks Inc. (Nasdaq: SONS), best known for its session border controllers (SBCs), signaling and policy control platforms and software-defined WAN optimization, is getting a range of products suitable for fixed and mobile networks as well as about 80 staff and a few hundred customer relationships.
The acquisition looks like something of a mercy mission. The two companies formed a partnership in December last year focused on WiFi-calling capabilities for mobile operators, and so were working closely, but during 2016 Taqua LLC has experienced a slide in revenues: Having generated full-year revenues of $28.3 million in 2015, its total revenues for the 12 months to June 30, 2016, were just $16.8 million. Sonus expects Taqua to generate revenues of just $4-5 million. In addition, the company has been losing money during the past year, reporting an operating loss of $10.8 million for the trailing 12 months ended June 30, 2016.
But Sonus, which isn't expected to change its name to Staqua, is optimistic that this deal will help it win new business and enhance its virtualization strategy. It believes the deal will:
Accelerate its mobile strategy by adding a Virtualized Mobile Core (VMC) Platform and an IP Multimedia Subsystem (IMS) Service Core to its portfolio, with the VMC fitting neatly with Sonus's existing SBC and Diameter signaling platforms.
Expand its fixed portfolio with the addition of a Class 5 Softswitch (the T7000) for network transformation projects and a Multimedia Controller used in IP Peering (the T7100).
Enhance its "growth strategy and network transformation initiatives."
Strengthen its position with "key large customers."
Investors seemed happy with the deal, as Sonus's stock gained 3.4% Tuesday following news of the deal and added a further 0.3% Wednesday to reach $8.76.
In the first half of 2016, Sonus generated revenues of $120 million, up 14% year on year, and an operating loss of $6.6 million, a vast improvement compared with the near $40 million operating loss a year earlier.
Re: Making 'Staqua' work Are customers or trend-chasing speculators ("investors") the ones seeking the buzzword-rich "cloud-native virtualization applications"? Taqua has a strong market position in small central office switches. Trouble is, the voice business is rather static and the smaller CLECs who loved Taqua are being killed off, while small mobile is consolidating. Sonus has a strong position with large carriers. If they keep Taqua going they'll have a wider product line to work from.
In this space, the media gateway and voice bearer path is critcial: You don't route local interconnection voice trunks through a distant cloud; that's potentially control-plane stuff, but even there best suited for the less-real-time aspects. I'm not sure if anyone anywhere near Sand Hill Road really gets how the PSTN itself works.
Making 'Staqua' work Sonus sounds like it has a formula for this deal that will revive Taqua's portfolio and operations as part of a larger company - I hope it turns out like that.
If I was a network operator, though, the question i would ask is - as I am looking for cloud-native virtualization applications, is that what a combo of Sonus and Taqua is going to be able to deliver?
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