Pan-European infrastructure provider Colt is upbeat over its recent acquisition of KVH, and aims to use the purchase to take market share from incumbent carriers in the region.
Colt announced last month that it will buy the Japanese data center service provider from FMR LLC, FIL and associates for 18.595 billion yen ($156 million) in cash.
Colt chief executive officer Rakesh Bhasin said the acquisition supports the company’s global expansion of its information delivery platform and help meet the increasing demand from its customers for network and data center capabilities in the key financial centers of Asia.
The deal will also allow Colt to capitalize on the opportunities offered by the APAC ICT services market, which is growing at around 12% per annum.
“Colt and KVH operate complementary businesses with similar technology and platforms, business models and product sets,” Bhasin said. “By combining the strengths of our respective information delivery platforms in Europe and Asia, we will be in a stronger competitive position to serve multinational customers on a global basis.”
Bhasin said the acquisition will also put the company in a stronger position to compete against incumbent players in the region, namely NTT East/West/Communications, KDDI and Softbank in Japan, Singapore Telecom in Singapore, and PCCW in Hong Kong.
“By taking a city-to-city approach to the market, we have staff, operations, and local knowledge in each market, and we own or manage much of the infrastructure up to the local access. This allows us to offer MNCs a consistent and seamless service experience across many of the markets in which they operate,” Bhasin told telecomasia.net.
“In contrast, while the incumbent providers have deep service coverage in their home countries, they lack service depth and local operations across the region. KVH/Colt will win share by targeting information intensive Pan-Asian or Eurasian MNCs that require high service quality and performance across the APAC region delivered with a consistent service experience,” he added.
Colt, which was founded in London in 1992 with funds provided by Fidelity Investments, provides network, data center, voice and IT services to over 25,000 major enterprise, mid-size businesses and wholesale customers worldwide. The pan-European firm operates in 23 European countries with a network spanning 47,000 kms, as well as 37,000 kms of US and Trans-Atlantic capacity. It operates metro networks in Europe with direct fiber connections into over 20,000 buildings and 20 telecom carriers.
As of December 2013, Colt reported a revenue of €1.576 billion, 34.4% of which were from European based multinationals.
KVH, which was also founded by Fidelity Investments, is headquartered in Tokyo, with operations in Singapore, Hong Kong and Seoul, providing Colt with an ideal platform for expansion in the region. The firm operates data centers across Asia, a global low latency network and metro networks in Tokyo and Osaka.
KVH has around 2,000 enterprise and wholesale customers. In 2013, KVH reported a revenue of €133.6 million, 92% of which was generated from MNCs (roughly half based in Japan.)
Bhasin said the KVH acquisition is not the company’s first entry into the Asian market. Colt already provides connectivity to APAC for a number of European customers, who are using Colt’s managed networking services to connect offices and employees across the globe.
Colt acquired MarketPrizm in 2013 and is currently trade as MarketPrizm in APAC, offering capital markets customers in Hong Kong, Singapore, Japan and Australia low latency market data solutions, Bhasin noted.
He said KVH will provide an established and successful platform – deploying its assets, relationships and people – for growth in Asia as part of a larger Colt organization.
The acquisition is expected to complete this month. Upon completion of the deal, Edward (Ted) Higase, KVH CEO, and his senior management team will continue to manage KVH and will run the Asia-Pacific business of the combined group.