TelePacific Expands Into Texas With Tel West Purchase

TelePacific Communications is pushing past its long-time California and Nevada boundaries and entering the Lone Star State.

On Tuesday, the competitive service provider said it has agreed to buy Tel West Network Services Corp., based in Austin, Texas. Tel West was founded in 1998; it owns 11,000 fiber miles, and provides Internet, voice and data services for SMBs, enterprises and government agencies. Financial terms of the deal were not disclosed as TelePacific and Tel West both are privately held. TelePacific expects to complete the acquisition in the third quarter.

Whats key for channel partners is that they soon will be able to target customers in one of the largest states in the country.

We are very excited about our ability to leverage our agency relationships in Texas,” said TelePacifics Rebecca Rosen, senior director of marketing communications. Tel West runs an agent program but its a modest one right now, Rosen said.

We gave a preview to some of our master agencies and, working together, we will begin to conduct strategy sessions to determine how best to leverage this new geography,” she added.

TelePacific will be able to share more information such as whether agents will see any changes to their terms and conditions, which appears unlikely by the time the purchase closes.

Messin With Texas

Since 2002, TelePacific has snapped up eight other companies. In the past year alone, the CLEC has signed five merger agreements. “It has been a busy year,” Dick Jalkut, chairman and CEO of TelePacific, told agents in a memo obtained by Channel Partners. Until now, though, all had been confined to California and Nevada. Most recently, TelePacific bought Telekenex, an IP services provider with offices in San Francisco and Seattle, and its sister company, Orange County Internet Xchange (OCiX Inc.), a colocation services provider. The Telekenex acquisition perhaps is most important, since it allows TelePacific to compete in the cloud-based security and managed network services sector.

But on June 28, TelePacific kicked up its strategy yet another notch. As it turns out, the providers key investors at Investcorp and Clarity Partners have been eyeing Texas for some time.

Several years ago after significant analysis, management and the board of directors identified Texas as a very attractive expansion state in part due to its 20 percent population growth and 15 percent business growth over the past 10 years,” Investcorps Lars Haegg and Claritys Clint Walker said in a joint statement. By adding Texas, TelePacific will cover approximately 20 percent of the small and medium businesses in the U.S.,” they said.

Jalkut agreed, explaining that moving into Texas also insulates TelePacific from “local economic uncertainties” in California and Nevada — namely their high unemployment levels over the past two years. “These strategic moves, both in California and now in Texas, will advance the companys market share and geographic coverage,” and strengthen its technology and infrastructure foundations, Jalkut wrote.

TelePacific isnt just seeking to grow, however. Its also looking to tie its purchases together. Because of the Telekenex deal, for example, TelePacific has launched a new managed services channel. And those indirect partners will be able to sell in Texas markets, thanks to the Tel West acquisition.

Whats Changing?

In terms of appearance, not much will change for Tel West. The Texas provider will keep its brand and continue to be led by Jeff Swickard, who will retain his title of president. The combined company will be headquartered in Los Angeles, where TelePacific is based, and Jalkut will remain chairman and CEO. In a press release, Swickard said he and his 116 employees are excited to be joining forces with a rapidly growing company supported by significant resources.”

Before accounting for Tel Wests assets, TelePacific boasts 38,000 business accounts and more than 1.2 million active access lines. It employs 1,300 people and claims the largest SMB revenue market share in California and Nevada, after AT&T, Verizon and CenturyLink. Those numbers will increase once Tel West becomes an official part of TelePacific — Tel West serves more than 3,500 customers in metro areas including Austin, Corpus Christi, Dallas, Fort Worth, Houston, and San Antonio. First, though, TelePacific has to jump through the typical regulatory hoops.