The announcement today that Warwick Valley Telephone would be acquiring Alteva must have left a few people scratching their heads. WVT is a 100-year old telco (CP: A new start in Warwick Valley) and Alteva (CP: Regional cloud VoIP providers form nationwide alliance) claims to be the nation’s largest provider of enterprise hosted VoIP, offering service in all 50 states.
But WVT is not a typical rural telco. Its ILEC territory is only about an hour outside New York City and is a prime candidate for suburban sprawl. Since 1998, the company has been publicly held, and it also has a CLEC business, known as USA Datanet that has a broad product portfolio targeting the business market. USA Datanet claims national connectivity and a global network backbone. After the acquisition, the plan is to merge Alteva’s operations with USA Datanet.
You could think of WVT as a smaller version of TDS Telecom or Cincinnati Bell—two Tier 2 carriers that have made acquisitions aimed at attacking the cloud market within the last 18 months or so. And viewed in that light, the acquisition could make a lot of sense.
As landline revenues dwindle, any telco that has any kind of enterprise business is seeking to build up that side of the business—and cloud services are one of the hottest segments within the business market. With enterprises making their decisions about cloud service providers now, companies like TDS Telecom, Cincinnati Bell and WVT can’t afford to waste any time getting into the market—and buying an existing cloud service provider is a great way to get into the market.