Windstream Charts Channel Opportunity After PAETEC Purchase11:45 AM EST Wed. Dec. 14, 2011
Windstream’s $2.3 billion acquisition of national service provider PAETEC was one of the biggest M&A deals that got people talking this year. And apart from expanding its nationwide footprint from D.C. to California, the PAETEC buy gives Windstream more traction with up-market, multi-location enterprise customers who are increasingly asking for complex cloud applications and managed services.
According to John Leach, Windstream’s executive vice president of business sales, the combined company will be looking to work with their channel partners – traditional telco agents, solution providers, VARs and systems integrators -- to help it grow the “hottest space” in telecom.
“We’re getting a lot more customers asking about cloud, virtualization, and managed services. Through our acquisitions, we feel like we’ve got a great foundation in which to offer and support those services and we’re getting really nice traction into some large customers based on our ability to do those sophisticated cloud-type applications,” Leach said. “We think there’s a great opportunity in the channel to get people ready to sell those kinds of complex applications and we think we have the support and the back office necessary to be able to help them sell and support them going forward. There is a huge opportunity across all of our channels. And we expect the channel partners to benefit.”
Leach said around 35 percent of Windstream’s revenue will come through the channel.
Windstream moved quickly to close the final transaction on Dec. 1st, after getting the final state and federal regulatory nods. And Leach said the integration of Windstream and PAETEC is already well underway. The combined company has set an ambitious June target date to have a ubiquitous network ready for agents to sell, Leach said, but agents will be able to cross-sell from both networks much sooner than that.
Leach said the early phases of integration, in addition to network integration, have been about defining the principal values and the winning strategies from both organizations, and combining them into a united message for the new Windstream.
“That’s really the bedrock of everything we talk about: it’s a combination of things we did well at Windstream, and things we think Paetech did well. It really is a blending of the two visions and two voices,” Leach said. “We really think we came together on middle ground.”
Following the completion of its merger, Windstream announced around 280 layoffs, and some of those positions were channel managers in regions – like the Southeast and Midwest -- where both companies had a presence, Leach said.
“Coming to market in a coherent way as one Windstream is one thing we can do, and that’s what we spent a lot of time talking about,” Leach said. “How we do that from a pricing, product, and go-to-market standpoint so we don’t three and four people stepping on each other’s toes. That’s what we spend a lot of time doing and it’s one of our biggest challenges.”
In regards to integrating the channel programs, Leach said it’s a job made easier in part because Leach himself is a former PAETEC channel chief -- he left PAETEC for Windstream in 2009 – and in part because the two programs aren’t all that far apart.
“The benefit is not only from an internal structure of the organization, but from the way we go about attracting and maintaining the dealers and the way we pay the dealers are very similar between PAETEC and Windstream," said Leach. “I obviously had a good understanding of the PAETEC plan having worked there, and it makes the integration easier when you know the people involved, and you know the plan and how it works and how it’s structured. When it’s similar to yours it makes that integration go that much smoother.”
And the obvious benefit to Windstream’s 1,500-plus agents is a wider network footprint and reach into areas they might not have had access to before, Leach said.
“I think the last word is that the integration is moving smoothly,” Leach said. “We’re excited about the combined entity going forward and supporting the channel.”