Integra Telecom Eyes Potential IT VAR Partnerships

By Josh Long

Integra Telecom is in the early stages of examining whether it should recruit IT VARs, an executive told Channel Partners.

Joe Harding, senior vice president of product and marketing with Integra Telecom, indicated that having two distribution channels one for information technology and one for the network  is logical as the Portland, Ore.-based CLEC expands from traditional telecom services to the cloud and hosted IT offerings.

“Ultimately those things come together and they converge,” Harding said during an interview last month at the Channel Partners Conference & Expo in Las Vegas. “The cloud experience is about the network and the application layer solution.”

Harding didn’t have any significant news to report concerning Integra’s agent sales channel. He said Integra is focused on giving them “more interesting products” to sell and making it easier for partners to do business with the carrier. The indirect channel, he said, is responsible for between 20 and 30 percent of Integra’s sales.

Moving Up the Food Chain

Integra is seeking to move up the food chain, targeting larger enterprises spending between $4,000 and $15,000 per month on telecom services, Harding said, although he emphasized that the company is not walking away from its smaller business customers. Harding said under 40 percent of Integra’s customers spend less than $1,500 a month, yet the carrier believes it could grow many of those accounts.

Integra noted in an investor presentation earlier this year that it now has a more attractive customer mix thanks to increased investments in the enterprise space.

The company also is dedicated to expanding its product portfolio and growing its Ethernet footprint, Harding said. Integra is directly connected to more than 1,800 buildings, including 1,438 commercial buildings, according to an investor presentation that was held in late February at a J.P. Morgan conference.

M&A?

Harding joined Integra in September 2011, a few months before Kevin O’Hara was named CEO of the company. The men previously worked together at Level 3 Communications where O’Hara was a co-founder and served as president.

Asked whether O’Hara has said anything about an incentive to acquire another CLEC or merge, Harding indicated that Integra currently is focused on organic growth. “Right now we are very much focused on driving growth within the markets we serve today,” he said. “We want to continue to invest in our fiber footprint putting more buildings on net. We’re going to continue to invest in new product capabilities.”

“When we feel like we are firing on all cylinders within our markets … I think it’s reasonable that we would look for acquisition-type opportunities,” Harding said, “but it’s not by any means our main focus.”

Revenues Fall

Founded in 1996, Integra has invested more than $2 billion in its network and provides communications, cloud solutions and networking to businesses in 35 metropolitan markets in the western United States. The company also has a wholesale business through its Electric Lightwave subsidiary.

Integra’s revenues actually declined last year while its loss slighly narrowed. Integra reported a net loss of $93.5 million on revenues of almost $600 million. In 2010, the company reported a net loss of $114.5 million on revenues of $616.1 million.

Integra anticipates “modest” growth in its 2012 revenues as the company returns to positive free cash flow. Integra projects that revenues will grow in the mid to upper single digits from 2013 to 2015.

Increasing Exposure

In February, Integra named a new chief financial officer, Jesse Selnick. The company had gone without a CFO for a few years, according to a spokesperson for the company.

Integra may be hoping that Selnick can raise the company’s profile in the investor community.

“People don’t appreciate the assets we have in terms of the fiber footprint. They don’t appreciate the traction we’ve made in serving those enterprise customers,” Harding said when asked about the new CFO. “I think Kevin came in and recognized to get better awareness within the financial community and attract more investment capital for the business, we needed someone [who] understands that market … better.”