The rumour mill seems to be constantly turning in the Comms world. If media outlets aren’t whispering about the latest bankruptcy announcements from Avaya, then they’re discussing a potential sale or investment from one “big name” or another. Lately, the most significant chatter seems to have been around BroadSoft – the global leader for UCaaS.
According to a report issued by Reuters, there’s a good chance that BroadSoft could be looking to the future with a potential “for sale” sign at the ready. Though the sources of this rumour remain somewhat under wraps due to confidentiality issues, they did comment that the UC giant has been hosting conversations with an investment bank called “Jeffries LLC” to discuss the possibility of handing the reigns either to a private equity firm, or another company entirely.
It seems that the market is taking the gossip pretty seriously. Share prices for BroadSoft Inc. jumped up to 11.5%, which means that the company now has a valuation of around $1.5 billion.
A More Competitive Market
It’s easy to see that the communications market has been growing more competitive lately. Innovative new technology and intuitive solutions for better, more efficient Comms have been driving growth in almost every sector. As Mitel announce their $530 acquisition of ShoreTel, and companies like Cisco continue to grow, it may be that BroadSoft has decided to re-think it’s strategy.
BroadSoft wouldn’t be the only company considering a sale either at this point. Not so long ago, reports were issued about 8×8’s decision to meet with Morgan Stanley to discuss a potential acquisition, and last month, Bloomberg commented on RingCentral‘s decision to hire advisers too.
Recently, BroadSoft has been focusing on growing its business, but it’s worth noting that the company has struggled when it comes to achieving significant operating profits. Though the brand managed a 9% year-over-year growth up to $88.8 million for Q2 2017, BroadSoft has also reported a net loss for the second quarter of 2017 of $(3.0) million.
Does BroadSoft Need to Sell?
Despite BroadSoft’s challenging market position, most experts have suggested that the company does still have room for growth. After all, BroadSoft has a great customer portfolio to tap into, including some of the world’s biggest mobile and fixed-line operators, and over 600 communication service providers.
Right now, there are additional rumours circulating that suggest that BroadSoft might be about to close some serious network transformation projects with Tier 1 operations in Europe, Asia, and the US that could turbocharge their financial reports for 2018.
According to William Blair Equity Research, BroadSoft could be a great acquisition for investors if they do decide to sell, thanks to its “differentiated technology” and fantastic customer base. The company pointed out that BroadSoft still have “strong gross margins” over 77%, making it an attractive asset to any buyer.
We have not managed to get an official statement on the potential sale however will update this article if we do.
