Network Infrastructure

Birch Continues to Grow: Service Provider Tucks in Cbeyond

By Paula Bernier, Executive Editor, TMC  |  September 30, 2014

Birch Communications Inc. in July completed the acquisition of Cbeyond (News - Alert). This $323 million all-cash transaction expanded the Birch IP network, added fiber assets, business customer base, data centers and other assets. INTERNET TELEPHONY recently interviewed Birch President & CEO Vincent M. Oddo on his company’s history and strategy.

How and when did Birch Communications get started?

Birch was founded in 1996 in Macon, Ga., as Access Integrated Networks Inc., in the wake of the historic Telecom Act of 1996. This law ushered an unprecedented wave of new competition into the telecom industry. Birch began as a reseller of telecom services focused on the underserved small- and medium-sized business customer segments. By 2002 we had grown to nine states and had annual revenue of $40 million.

When did you come aboard and what have been some of your key initiatives?

In 2003, I took over as president and CEO, and one of three shareholders, and I implemented a major shift in business strategy. The initiatives that were implemented spearheaded the build out of our IP network, which enabled us to provide more sophisticated voice and data services to our business customers. In addition, the company embarked on a multiyear effort to acquire smaller competitors in the rapidly consolidating telecommunications marketplace. To date, we have closed 24 such acquisitions worth more than $500 million.

What does Birch sell to whom and where?

Birch sells communications, IT and managed dervices to business customers in all 50 states across the United States, as well as Washington D.C., Canada and Puerto Rico. We deliver our services using our IP network, our cloud facilities, our managed services platform, and our data centers. [That includes an] IP network covering 22 states plus Washington, D.C.; 31,000 fiber route miles; 580 fiber-lit buildings; 600 network POPs; 200 Ethernet over Copper POPs; and six tier 3/4 data centers.

Birch recently bought Cbeyond. Why?
During the past few years, we have closed and integrated 24 tuck-in acquisitions. The term tuck-in refers to the acquisition of assets that complement our footprint, product offerings, or customer base, allowing us to tuck them into our organization with relative ease. Specifically with regard to Cbeyond, we recognized an opportunity that fit well with that strategy. Now that the acquisition is closed, our annualized revenue is almost $700 million and we serve nearly 200,000, mostly business, customers. 

How will Birch’s acquisition of Cbeyond impact existing Cbeyond customers?

The combination of Cbeyond and Birch is a long-term commitment to our customers to provide a broader array of services priced and designed to make their businesses successful. Today, our customers are served by a company with strong financial resources. There will be no notable changes in rates or billing cycles for the Cbeyond customers, and they can look forward to an expanded network that will provide them access to improved communications, IT, and managed services. We have already greatly improved customer care support by addressing customer needs in a faster and more responsive manner. Birch is known for outstanding customer service, and it will continue to be our number-one priority as we move forward. 

Cbeyond is Birch's 21st acquisition since 2006. What were some of the others?

Birch completed the asset acquisition of certain Ernest Communications (News - Alert) Corp. assets in August 2013. This strategic acquisition added a significant number of enterprise customers and broadened Birch’s capabilities to sell and manage enterprise-sized customers. Birch completed the asset acquisition of certain Lightyear Network Solutions (News - Alert) assets in September 2013.  Along with the addition of several thousand customers, this acquisition expanded the Birch network service area in Kentucky and provided additional capabilities for Birch to expand its cloud service offerings. Birch completed the asset acquisition of certain EveryCall and Selectel assets in the second quarter of 2014. These acquisitions expanded the Birch customer base in several areas around the United States.  Birch completed the asset acquisition of certain Liberty-Bell assets in the second quarter of 2014.  This acquisition expanded the Birch business customer base in the Denver area.

What’s next?

Birch isn’t through growing just yet.  We intend to continue our growth strategy through both organic sales and, of course, tuck in acquisitions. In addition, our growth will also be enhanced as we significantly expand our IT and managed services portfolio of 

Edited by Maurice Nagle