Cloudex – VoIP market Image

Smooth transition

Just as Skype made consumers and businesses aware of the potential of the internet to make voice calls, we are now on the cusp of another era whereby cloud communications are introduced far more widely into the business market.

So says Xavier Casajoana, CEO of VozTelecom, a Spanish cloud communications operator which enables VoIP (Voice over Internet Protocol) services for the enterprise market over the internet. “Just as in their personal lives, people now expect to have the same access to communication tools through the internet at work. Companies need systems that connect all workers and they are using the cloud to do that.”

His beliefs are certainly borne out in the data. The market for VoIP services and hardware is forecast to grow at a CAGR of 9.1% between now and 2021 as it rapidly replaces landlines as the standard for both residential and business customers.1

As Casajoana adds: “The cloud is now replacing old legacy PBX (Private Branch Exchange) systems which have been around for as long as 40 years, and a key driver of this is the move away from ADSL lines with low bandwidth to fibre access with much greater width. This allows for a vast range of enhanced services for businesses such as better video conferencing, instant messaging, call centre functionality, and data recording.”

He says packaging up the range of service offerings for customers, and conveying the flexibility of cloud services, is key for companies such as his. “For us the offering is based upon three key pillars. Namely internet access using broadband networks, providing all telephony services both fixed and mobile, and offering PBX in the cloud.”

Service levels are also crucial. “We manage our customers through our own call centre and it’s essential we provide a five star service, that is our main value proposition. It is critical for our clients to have absolute confidence in us because these are business critical services we are dealing with. It is about helping our customers make a smooth transition from old to new systems.”

Huge market

In the US the penetration of cloud services in the business market is currently running at around 20%, but Casajoana says the figure is nearer 5% for most of Western Europe. “We specifically target the SME market and there are half a million such companies in Spain. That is a huge target market for us.”

Last year VozTelecom completed a successful IPO and now plans to use its new capital to expand its footprint further and deeper across Spain. “Our plan is to consolidate the cloud communication space in the mid-market and over the next few years there will be opportunities for us to make acquisitions so that we can build up a very strong proposition in the Spanish market. Our target is to effectively double revenues to €20m by 2019.”

There should be plenty to go at for the likes of VozTelecom given how fragmented the market remains. Spain, like the rest of Europe, is dominated by niche domestic players in this market and there are significant opportunities for providers to target the largely untapped market of SMEs by emphasising the cost savings and flexibility associated with a VoIP offering.

Attractive targets

The potential growth of the market means those players with leading edge technologies also become particularly attractive targets. For instance, Clearwater International recently advised HeidelbergCapital Private Equity on the sale of German company Snom Technology to Hong Kong-listed VTech Holdings.

Snom was founded 20 years ago by a group of university friends at the cusp of the internet revolution and today remains one of the leading brands of professional and enterprise VoIP telephones. It is globally renowned for its robust, high-quality phones that are designed exclusively for the trained and certified IT professional and PBX installer, while all of Snom’s products are universally compatible with leading PBX platforms.

André Deloch, Partner at HeidelbergCapital, says the secret to the company’s continued growth has been the development of its open session-initiation protocol (open SIP) which enables VoIP connections to be made on a large scale. “The company is perceived as a technological pioneer in the VoIP market. It offered some of the first hardware endpoints for VoIP telephone calls and the open-SIP VoIP market has been defined and shaped by the business. As such the company is a sought after and reliable partner for all PBX service providers.”

He adds that the industry has been strongly influenced by the rise of hosted PBX service offerings in the cloud. “The initial cost for setting up a telephone system has moved from capex (capital expenditure) to opex (operational expenditure/rental models) for cloud based PBX software.”


In terms of the sale to VTech, Deloch says there is a large strategic fit between Snom’s technological expertise in VoIP for B2B and VTech’s vast experience as the world’s largest wireless phone manufacturer for the B2C market. “The synergies can be realised through the reduction of manufacturing cost, operational improvement, joint sourcing, joint market access, technological expertise in different areas of the communication industry, and exposure to both the B2B and B2C markets,” he adds.

“Snom is constantly developing new and advanced IP technology solutions and has one of the strongest brands in B2B VoIP communication, standing for technological leadership in a fast moving industry, so had very strong appeal to VTech.”

Deloch says both businesses will grow faster and develop an even stronger market position by aligning technological and manufacturing expertise. “The combination can lead to a new market leader in wireless and VoIP telephone communication for B2B and B2C customer segments. VTech is a global leader in electronic learning products, while it also provides highly sought-after contract manufacturing services.”

1 Market Research Store

Clearwater International advises HeidelbergCapital Private Equity and the Founder of Snom Technology AG on its sale to VTech Holdings Limited

Clearwater International acted as sole financial adviser to HeidelbergCapital Private Equity and the Founder of Snom Technology AG (Snom) on the sale of 100% share capital of Snom Technology AG to Hong Kong listed VTech Holdings Limited (VTech). Founded in 1996, Snom is a multinational corporation, headquartered in Berlin, Germany. It was the world’s first, and remains one of the leading brands of professional and enterprise voice over internet protocol (VoIP) telephones. Snom’s German engineering is globally renowned for its robust, high-quality and feature-rich business telephones, that are designed exclusively for the trained and certified IT professional and private branch exchange (PBX) installer. Read more about this transaction.

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