According to an article over at Phone+, itcd has recently been playing some serious hardball with its agents. The southern CLEC appears to have unceremoniously severed its relationship with a variety of agents and master agents. Now, Phone+ caters to the channel and their article is of course from that point of view, but regardless it is clear that Deltacom is in the midst of reorganizing its channel sales. This sort of thing is never fun for those involved, and I can’t say anything about the merits of the accusations on either side of the fence. As a general matter though, this sort of event happens periodically in the sector when a carrier decides it isn’t getting what it wants out of the channel for whatever reason. So what is Deltacom not getting?
One can never be sure about the specifics, but from an outsiders perspective Deltacom has always been somewhat revenue heavy and margin light for the amount of fiber they operate. They have been fighting steadily to increase those margins over the past year or two while allowing revenues to stagnate. This further move to restructure its relationship with its agents is likely just another front in that effort. Basically, they want the revenues from the channel to be of greater value than they currently do, and as part of the plan to get there they are pruning mercilessly.
There has been talk (some of it by me) that Deltacom might be prepping themselves to be acquired, and this new development could easily fit into that scenario of course. However I tend to think that what a company would do to make itself attractive to a buyer is very frequently what it ought to be doing anyway to improve its operations and generate more value for its shareholders. So I would shy away from the suggestion that this is directly tied to a buyout coming down the pipe, although I still think it highly likely that M&A lies somewhere in the company’s future.
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