2013 North American VoIP Access and SIP Trunking Services Growth Excellence Leadership Award

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1 2013 North American VoIP Access and SIP Trunking Services Growth Excellence Leadership Award 2013

2 Growth Excellence Leadership Award VoIP Access and SIP Trunking Services North America, 2013 Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360-Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2013 North American Growth Excellence Leadership Award in VoIP Access and SIP Trunking Services to Windstream. Significance of the Growth Excellence Leadership Award Key Industry Challenges Addressed by Increased Growth Excellence Leadership The North American voice over Internet protocol (VoIP) Access and session initiation protocol (SIP) trunking services market is at a critical stage in its ascension to become the de-factor communications public switched telephone network (PSTN) link for businesses. Moving from a nascent, early-adopter stage to mass-market adoption and rapid growth creates some unique challenges for the industry. Market participants are almost exclusively focused on building customer bases, marketing to businesses using legacy time division multiplexing (TDM)-based communications technology, rather than attempting to poach customers from other VoIP-based solution providers. Likewise, the market has experienced several years of intensive consolidation among market participants, thus changing the competitive landscape and forcing a large number of disillusioned customers to seek new providers after being affected by a merger or acquisition. Finally, as VoIP access and SIP trunking services become increasingly more popular, the onus will be on service providers to more rapidly and efficiently deploy these services to a broader range of customers. Market participants with a focus on growth excellence leadership are well positioned to address these challenges. Most importantly, steady year-over-year growth rates tell customers and competitors that the growth excellence leader has the ability to scale both its infrastructure and staff to support the increase in demand for its services. Whereas market participants may hold back or delay broader rollouts of their VoIP services, market leaders focused on growth push into new markets and a wider profile of customers, seizing new opportunities as soon as they present themselves. Similarly, growth excellence leadership enables market participants to identity merger and acquisition opportunities that enable manageable growth, while minimizing customer churn as a result. Finally, growth excellence leaders continually reassess their own internal processes and procedures and develop more efficient means of onboarding customers and deploying services as quickly as possible, thus creating a competitive differentiation as well as extending growth opportunities Frost & Sullivan 1 We Accelerate Growth

3 Best Practice Award Analysis for Windstream The Frost & Sullivan Award for Growth Excellence Leadership is presented to the company that has demonstrated excellence in capturing the highest annual compound growth rate for the last 3 years. Windstream s Performance in VoIP Access and SIP Trunking Services Windstream s portfolio of VoIP access and SIP trunking services is extremely successful in the market, placing the company among the top competitors in the space in 2012 with nearly twenty percent of the total market revenue. Through both organic growth and a wellexecuted merger and acquisition strategy, Windstream has maintained a steady level of growth for the past three years, building a leading compound annual growth rate (CAGR) of 42.8 percent between 2010 and 2012, comparing favorably against Windstream s nearest competitor s CAGR of 36.3 percent and the entire market s 10.9 percent CAGR for the same three year time period. Key Performance Drivers for Windstream Windstream s success in the VoIP access and SIP trunking services market, and in turn its Growth Excellence Leadership, can be attributed to several factors. First and foremost, Windstream s aggressive acquisition history has made the company adept at both choosing acquisition targets and integrating those acquisitions into Windstream s product offerings. Furthermore, Windstream s effective acquisition strategy has enabled it to achieve a steady growth rate while minimizing post-acquisition churn. To that end, Windstream has demonstrated that the company can quickly integrate and deliver at scale the best elements of its expanding product lines, whether developed internally or as part of an acquisition. Finally, Windstream s competitive strategy based on selling the benefits of unified communications, rather than selling specific services to its customers, clearly resonates with customers. Execution of Acquisition Strategy Windstream has taken advantage of the consolidation taking place in the VoIP access and SIP trunking services market to great effect, securing the company a position among the top five competitors in terms of revenue. Most notable was Windstream s acquisition of Paetec Communications in late 2011, which combined two companies nearly equal in market share. While each of Windstream s acquisitions provided significant growth, the 15 percent growth the company experienced in 2012, without a significant acquisition to bolster it, stands as a testament to Windstream s ability to retain and grow its customer base even while integrating new products and staff into its organization. While some market participants have leveraged M&A to simply acquire new customers, Windstream actively seeks out the best pieces of its acquisitions, including products offerings, staff, and even executives, and adopts them throughout the organization. This approach, in Windstream s view, puts the best people and products to deliver greater value for their customers Frost & Sullivan 2 We Accelerate Growth

4 Windstream also works diligently to incorporate acquired infrastructure into its operational and billing systems to streamline the myriad of platforms into a common set of product offerings. Ultimately, Windstream s effective integration strategy, more so than its acquisition strategy, has enabled the company to scale itself into a highly competitive market participant. Selling Unified Communications, Not Services Windstream s competitive strategy revolves around selling the benefits of unified communications, rather than selling specific services to its customers. This is a fundamentally different approach from that of many of its competitors in the VoIP access and SIP trunking services market. By selling customers on the concept of unified communications, and through its ability to provide customers with different deployment options, Windstream is able to design solutions that are tailored to each customer, rather than simply being disparate components of an enterprise s unified communications platform. Product Offerings that Cater to the Enterprise Customer Windstream has progressively directed its focus toward the enterprise customer. Unlike its competitors, Windstream does not focus its attention on single VoIP access lines or analog line replacements for the extremely small office or micro branch, though the company may steer these customers toward its hosted IP telephony solution or a managed service based on its Allworx product, a proprietary on-premises IP PBX platform it gained in the Paetec acquisition. Either option provides small to mid-sized business customers with a feature-rich alternative to standard analog lines without the burden of capital expenditures. For larger customers, Windstream s primary voice offerings include VoIP trunking services for customers with legacy TDM private branch exchange (PBX) or non-sip IP PBX system or SIP trunking services for modern IP PBX and on-premises unified communications platforms. To maintain quality of service for voice as well as to provide the flexibility of bundled pricing, Windstream only provides its VoIP trunking services over its multiprotocol label switching (MPLS) and data networks. In fact, the company uses this data/voice bundle as a competitive advantage, offering customers a set amount of bandwidth that they can leverage for their entire voice, Internet, and data network needs. When not in use for voice traffic, an enterprise site s connection is available for faster downloads, for example. Finally, Windstream directs significant effort on pre-sales engineering to ensure that the products and services it provides meet its specific customers needs. This approach, rather than a boiler-plate menu of services, aids in customer loyalty and retention, as well as provides opportunities for attachment of additional services going forward Frost & Sullivan 3 We Accelerate Growth

5 Conclusion Windstream achieved growth excellence leadership in the VoIP access and SIP trunking services market by well-targeted acquisitions and an effective execution and integration of those acquisitions within the larger organization. By continually integrating the best practices, people and products from its acquisitions, Windstream consistently seeks longterm growth in its services, rather than relying on the short-term bounce an acquisition can bring. Therefore, Frost & Sullivan is proud to present Windstream with the 2013 Growth Excellence Leadership award in the North American VoIP access and SIP trunking services market. Critical Importance of TEAM Research Frost & Sullivan s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360-degree view of industry challenges, trends, and issues by integrating all seven of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients. Chart 1: Benchmarking Performance with TEAM Research 2013 Frost & Sullivan 4 We Accelerate Growth

6 About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit Frost & Sullivan 5 We Accelerate Growth