Merger deal puts Logic, North Rock in ‘better position to compete’
Bermudian internet service providers (ISPs) Logic Communications and North Rock Communications decided to merge as a way to better compete against an increasingly more competitive marketplace, the two companies said in a press conference yesterday morning.
Logic and North Rock announced late last week that they had agreed to amalgamate and the new entity will be a wholly owned subsidiary of KeyTech Limited. KeyTech is the parent company of the Bermuda Telephone Company (BTC), Logic Communications, WestTel and the Bermuda Yellow Pages. QuoVadis, CellOne and Bermuda CableVision are also KeyTech affiliates.
Although both firms will retail their individual brands for the short-term, they will eventually trade under the Logic Communications name.
The merger comes at a time when the Bermuda Regulatory Authority (RA) is looking to level the playing field by replacing segmented licensing with a unified single license, the Integrated Communications Operating License (ICOL) allowing service providers to offer a full suite of integrated telecoms products including internet, local and long-distance phone services and cell phone service.
Vicki Coelho, CEO of North Rock Communications, said she believes the companies will have “much better success” as one entity.
“We will be in a better position to compete with the other ISPs as a combined Bermudian entity. Together we will be able to secure access to capital, for future investment and to provide customer-driven product offerings and superior customer service,” Ms Coelho said.
“We really see the value of bringing them together because obviously there’s a lot of duplication in what we do and we believe to effectively compete, as a Bermudian company against the other ISPs that are internationally owned, it will be beneficial to the market.”
The companies say that the deal, which closed last week, did not need approval from the Regulatory Authority and that they will apply for only one ICOL under the Logic name. And despite the two companies becoming one, they say the move will actually help them better compete and offer customers more choice in the growing marketplace.
“We believe it would be beneficial to amalgamate prior to the new licenses being issued,” Ms Coelho said.
“I think by design, it’s always been spoken of since the reform many, many years ago that this would happen — you would see a consolidation in the marketplace. But with that consolidation there will be much more services and enhanced services for customers,” KeyTech CEO Lloyd Fray said.
“Presently, there are five internet service providers, as of last Friday: Logic, North Rock, Transact, Link, and TeleBermuda. With the new issuance of licenses this week, there will actually be 20 ICOL holders, so the possibility of going from five up to 20 will be a lot of choice. And what we also will bring is choice in new services, which is going to be one of the biggest benefits of this new amalgamated company,” Ms Coelho explained.
Neither company would disclose the financial terms of the deal, but said it would be reveals in Logic’s next earnings report.
When asked about what the merger might mean for local employees, Ms Coelho said, “Today the staff remains constant. We will be reviewing where there may be opportunities for better synergistic relationships but at this point there are no redundancies.”
“Everything, from a carrier standpoint, there’s a cost of doing business. To meet the demands and to continue with the quality of service, we have to invest and reinvest So that’s where the synergies that we’re talking about when you see companies coming together — is to improve on their investments to improve those services for customers,” Mr Fray said.
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