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Summary

Luxembourg-based Interoute (IR) has announced an agreement to acquire London-based Easynet in a deal that values the latter at an estimated £402m. This is the most significant combination of privately held fixed network service providers to mid-sized enterprises in Europe for a decade, but the new partners face a dilemma around branding and marketing identity.

A clever deal, but the question of brand remains

This is a clever deal. On the one hand it gives IR the UK market base it lacked; on the other IR’s European network is exactly what Easynet was looking for.The two have run-rate revenues of approximately €700m ($782m). IR operates a dedicated business user network across Europe and into 24 European city networks. Easynet operates a consumer ISP and an enterprise global services unit out of the UK. It has been resourceful in helping corporates with the international network requirements to get into Northern and Eastern Europe – exactly where IR is strong.

IR has built a network and cloud service platform for European users and is extending this platform into Asia-Pacific through partnerships. It has carved out its own business segment in regional industrial services, for example among distribution and packaging companies in Scandinavia and Benelux. Easynet has always gone the extra mile for its industrial and media clients that needed extra sites in Latin America. Easynet and IR are both resourceful and customer-centric operators and if the telecoms sector is ever going to develop vertical-focused specialists, this is where it will start.

The deal is good news for enterprise buyers because it is a combination of two strong service providers, in stark contrast to the rescue of Vanco by Reliance in 2007. This time around, the parties are telling the market that they have lots more to offer. The one potential pitfall is the brand identity of Easynet, which is arguably stronger not just in the UK but overall. IR will not want to lose the power of that brand and it will be interesting to see how the partners go to market together.

Appendix

Further reading

Enterprise Insights: Evaluating Suppliers in Global Managed Services, TE0005-000695 (April 2015)

Global Services Deals Analysis 1H14: Regional Shakedown, TE005-000680 (January 2015)

Author

David Molony, Principal Analyst, Enterprise Services

david.molony@ovum.com

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