Though ShoreTel Inc. (SHOR) has rebuffed his $540 million acquisition offer, Mitel Networks Corp. (MITL) chief executive Rich McBee is adamant that consolidation is coming to business phone, conference and communications providers, and quickly.
"When you look at the demographics of our market, it's a consolidating market," McBee said. "Size really does matter."
Mitel itself has done four deals in the past year. Meanwhile, Vonage Holdings Corp. (VG) said earlier this month that it will pay $114 million for Telesphere Networks Ltd. China Huaxin Post & Telecommunication Economy Development Center purchased Alcatel-Lucent SA's business communications arm for €202 million ($250 million) in October. Avaya Inc. bought Nortel Networks Corp.'s enterprise services business for $475 million in 2009.
It is a fragmented field. A report from technology research firm Gartner Inc. over the summer put the number of unified communications-as-a-service companies at more than 100.
"Eventually a big market consolidates down to the big three," McBee said, noting that smaller, niche players would remain.
Mitel and ShoreTel offer a mix of on-premise telecom hardware and software and cloud services.
McBee said that Mitel added 49,000 recurring cloud lines in the most recent quarter, while ShoreTel added 9,000. "We're an order of magnitude bigger in terms of our cloud business," he said.
Mitel made a public bid of $8.10 per share in cash for ShoreTel in October. The offer expires on Nov. 20. "ShoreTel is an attractive asset for us," McBee said. "It's not a must-have asset."