Stuart Corner
Tuesday, 27 May 2008 03:32
IT Industry -
Deals
Page 2 of 3
Vanco will fit well with Yipes' existing business and Reliance's global ambitions for it. At the time of the acquistion Yipes owned more that 22,000 route kilometres of fibre across 14 US metros, which covered around 40 percent of the total US datacom market, and was also present in London, Hong Kong and Tokyo. It had almost 1,000 enterprise customers and provided a mission-critical communications platforms for entire industry communities. Reliance said at the time that it would expand Yipes' coverage within the US and take Yipes to nearly 40 new markets in the Middle East, Asia and India.
Vanco's managed network services are presently available in over 40,000 locations across 163 countries with 90 percent of its revenue from developed markets of UK, US France and Germany. Reliance said that Vanco's customer base, which includes AVIS, British Airways, Siemens and Virgin Megastores, would increase Reliance Globalcom's enterprise customer base to over 1,400.
Vanco got into strife earlier this year running short of cash. it suspended its shares on the London Stock Exchange and founder and CEO, Allen Timpany was kicked out by the company's bankers as its financial woes deepened and Andrew Coppel, an executive with a track record or rescuing failing companies, was appointed chief restructuring officer.
In a statement Vanco said the principle reason for the suspension of its shares was "uncertainty about the results for the year ending January 2008. We are still operating within our [bank-provided credit] facility, but the headroom is limited. Notwithstanding this, the directors believe that, bar any materially adverse event, the company will trade normally and not breach the facility."
The Financial Times said at the time that the value of Vanco shares had fallen 80 percent in the past year as a result of investors' concerns grow about the rising disparity between Vanco's turnover and cash outflows. At the time of their suspension they were worth 64.25 pence, valuing the company at £41.5m ($US82.5m) somewhat more than Reliance paid for the business.
Vanco's business model of providing global networks for multinationals without owning any of its own network infrastructure appeared to have been very successful: it buys circuits from other carriers as and when required and with its own network operations centres combines and manages these to meet the network requirements of its clients.
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