TDS Telecom Mounts Cloud Services Push Behind Channel Acquisitions

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As cloud computing and data center convergence catalyze a pickup in channel M&A, larger service providers continue to reach across the IT-telecom divide to expand their holdings.

Among the more active participants in that recent M&A wave is Telephone and Data Systems (TDS), the 40-year-old, Chicago-headquartered telecom giant whose subsidiary, TDS Telecommunications Corp., is the country's seventh-largest telecom service provider. The parent company TDS controls TDS brands as well as U.S. Cellular, the wireless subsidiary it majority-owns.

In June, TDS paid $45 million for Vital Support Systems, an Urbandale, Iowa-based solution provider and member of CRN's Tech Elite 250 list highlighting the country's top data center, networking and infrastructure solution providers. It was the latest move in a string of strategic buys that included OneNeck IT Services in June 2011, TEAM Technologies in Dec. 2010, and VISI Inc. in March 2010.

[Related: Solution Provider M&A: TDS Acquires Vital Support Systems]

Bill Megan, president of TDS Hosted & Managed Services and executive vice president, TDS Telecommunications, told CRN that Vital's roots as a traditional VAR as well as its significant hosted and managed services expertise made it the type of channel acquisition TDS was seeking.

"As part of our strategic evaluation, we'd been actively looking at opportunities for growth, and what we concluded is that IT infrastructure outsourcing -- what we call hosted and managed services -- was a very natural next step for us," Megan explained.

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