With Verizon Acquisition Pending, XO Master Agents Concerned About Contracts

Verizon’s pending purchase of XO Communications’ fiber-optic network business has XO’s master agents worried about the future of their contracts.

Announced in February, the roughly $1.8 billion deal is expected to close during the first half of 2017. It would provide Verizon with access to XO’s fiber-based IP and Ethernet networks, “helping to better serve enterprise and wholesale customers,” according to XO. In addition, the acquired fiber facilities will help Verizon continue to densify its cell network.

Separately, Verizon also will lease available XO wireless spectrum, with an option to buy that spectrum by the end of 2018.

XO master agents Intelisys, WTG and PlanetOne Communications spoke with Channel Partners about their concerns regarding their contracts, but said they are optimistic about new opportunities with Verizon.

Rick Dellar, Intelisys co-founder, said that after speaking with senior-level XO executives, there does not appear to be any available information about what will happen to XO once the acquisition is final. XO met with some of its partners at the recent Channel Partners Conference & Expo, but didn’t provide many of the answers they were looking for.

“It’s disappointing to not have any substantive information about what will happen to XO, to our ability to take care of our customers placed through XO, or what will happen to the commissions we’ve built up over the past two decades,” he said.{ad}

Dellar said he has taken part in several conversations with other XO masters and they agree the integration has not begun, nor was it addressed during the acquisition discussions and negotiations.

“We are all pretty much in the dark as to what is going to happen,” he said. “We have a lot of respect for the XO executives and a long history with the company. We do not believe they are being coy with us. I really think they have no idea what’s going to happen to many of their colleagues and the channel. In the absence of that, the official message is ‘business as usual’.”

David Farmer, XO spokesperson, tells Channel Partners that it is “very early in the transaction approval process.”

“I can tell you that during the approval process, XO will continue to operate independently and maintain the highest quality service standards for our customers and we remain committed to our partners,” he said.

Ted Schuman, PlanetOne’s founder and CEO, said the relationship with XO is important to his company and its partners around the country.

“We are eager to sit down and discuss the impact of this acquisition with XO’s executive team,” he said. “Continued communication is critical – especially around mergers and acquisitions. XO needs to get the word out to partners and set expectations.”

Vince Bradley, WTG’s CEO, said he is “absolutely concerned, but …

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… confident” that Janet Schijns, Verizon Enterprise Solutions’ new channel chief, will “do the right thing here as she is very channel-friendly.”

“Yes, this could definitely lead to new possibilities with Verizon with augmented fiber and service footprint in general,” he said.

Kevin King, Verizon Enterprise Solutions’ director of external communications, tells Channel Partners his company is not planning to share additional information about its plans for XO until after the transaction has closed.

“As we have stated a number of times, Verizon Enterprise Solutions is committed to the channel,” he said. “In just the past year and a half, we have launched a full resale channel model, built the sales channel in the U.S. public sector, Europe and APAC, and developed the channel into one of the fastest-growing sales engines inside VES. We don’t anticipating slowing our momentum in this area.”

Dellar said he will miss doing business with XO, a company Intelisys and “some of the other masters agents really helped build into a solid channel program.” However, he said the acquisition presents a “great opportunity for Verizon business.”

“Verizon seems to be laser-focused on the channel right now, which has not always been the case,” he said. “We have been meeting with Verizon regularly in recent weeks and months, and these guys seem to ‘get’ the channel. There is a huge opportunity here for Verizon to use the XO purchase as a platform to build a hugely competitive and possibly disruptive channel, while at the same time making the type of commitment to the channel that has not been a part of Verizon channel programs historically. We are cautiously optimistic.”

In the U.S., XO owns and operates one of the largest IP and Ethernet networks that provides private data networking, cloud connectivity, UC and voice, internet access and managed services.