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Yesterday, Sonus Networks and GENBAND announced they were merging the two companies into one company. Both companies are key players in the Carrier IP Telephony market enabling Service Providers and enterprises to move into the IP world with digital transformation solutions. Highlights of the merger are:

  • After the merger, Sonus and GENBAND shareholders will each own about 50 percent of the shares of the combined company
  • The merger will produce an anticipated $40 to $50 M in annual cost savings by the end of 2018
  • Deal is expected to close in the second half of 2017
  • The combined revenue (based on 2016 revenues) would be $680 M, nearly 50/50 in product/service with 67 percent of the revenue derived from US and Canada

This positons the merged company with a solid portfolio of application servers, signaling solutions, session border controllers, softswitches, and media gateways. Growth areas identified by the companies are:

  • GENBAND’s “Kandy” Cloud communications platform-as-a-service (CPaaS)
  • Sonus’ new security analytics and control platform for real time flows and digital services

Like all mergers, we see challenges for the combined entity to include:

  • Consolidating overlapping product coverage in Session Border Controllers and Softswitches
  • Managing overlapping sales forces and sales channels

In Dell’Oro Group’s recently published 1Q17 Carrier IP Telephony Quarterly Report, we estimate that the combined market share of the two companies’ product revenues on a worldwide basis to be about 9 percent, positioning them as the fourth largest vendor in this space.  In rank order, Huawei, Nokia, and Ericsson round out the top three spots in market share.