Rogers Communications Inc. RCI announced its acquisition of Internetworking Atlantic Inc. (“IAI”) – a communications technology company that offers a range of IT products to business institutions – for an undisclosed amount. The deal will help Rogers provide enhanced technology and enterprise service solutions to its business customers.
A Strategic Move
In today’s world, businesses of all sizes rely heavily on information technology to achieve their goals. However, small and medium businesses (SMBs), at times, lack sufficient IT infrastructure to support their day-to-day operations efficiently. They often rely heavily on telecom operators and cable MSOs by outsourcing their IT needs. Rogers is actively vying to pick up new business customers as well as provide improved services to its existing ones. However, it faces challenges from rivals like BCE Inc. BCE, Telus Corp. TU and Shaw Communications Inc. SJR in this rapidly growing business segment.
The purchase of Internetworking Atlantic will provide Rogers access to IAI’s Halifax-based data center along with its expertise in cloud computing as well as virtual, hosting, professional services and fiber footprint across Atlantic Canada. Rogers’s business customers will benefit from Infrastructure-as-a-Service (IaaS) capabilities as well as outsourcing of their IT operations through IAI’s extensive fiber infrastructure across the Atlantic coast.
The Path Ahead
While Rogers eyes significant growth in the business services segment, it is simultaneously expanding its LTE presence across Canada. Moreover, the company plans to roll out its Ignite Gigabit Internet service across its entire cable footprint in Ontario and Atlantic Canada by the end of 2016. We believe that significant LTE network expansion, innovative service launches, and investments in the business services division to boost its data center and cloud computing portfolio will drive the company’s revenues, going forward.
Rogers Communications currently has a Zacks Rank #3 (Hold).
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