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Level 3-tw telecom to Create ‘A Stronger Channel Program’

By Kelly Teal
June 17, 2014 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2014.**

Analysts agree: Level 3 Communications and tw telecom inc. share enough similarities in enough areas that their $7.3 billion deal is bound to pay off – that is, if the companies’ executives manage the transaction properly. If that happens, then the two providers stand to create a fiber behemoth serving organizations all the way from the SMB to the enterprise, throughout the country, thanks to the combination of their mutual strengths. Still, the biggest question for partners is, how will this transaction impact their sales? For the most part, industry analysts say, for the better.

‘A Stronger Channel’ But ‘Fewer Sales Support Resources’

Among partners, the looming question remains, how will a Level 3-tw telecom union impact the channel? Analysts predict generally positive outcomes – and those expectations mesh with those of Channel Partners readers: As of 11:30 a.m. ET on Tuesday, more than three-quarters (76 percent) polled agreed that the deal seems like a good fit and will be more positive than negative for the channel. Just 5 percent of respondents voted that the transaction “won’t do the channel any favors."

On the whole, analysts say to expect Level 3 to expand its partner program using the best of tw telecom’s practices, with hiccups along the way.

For example, said Fedor Smith, president of ATLANTIC-ACM, while the merger will allow agents and resellers to sell more services into more areas through one provider, “there are likely to be some channel conflict challenges during the integration."

Plus, smaller agents and VARs might fall through the cracks, said Ryan Brock, senior vice president, worldwide SMB cloud and channels at AMI-Partners.

“Some fringe partners in the lower program tiers may get left behind," he said. Yet, he said, “the established, higher value partners stand to gain through access to additional (potentially higher-margin) solutions and bundles, and additional layers of support and enablement."

The takeaway, said Brock, is this: “I believe that the combined channel investment will increase, as they recognize the need to appease and retain their top partners."

Craig Clausen, executive vice president of New Paradigm Resources Group (NPRG), agreed.

“Level 3 does not have one of the strongest channel programs in the industry, while tw telecom’s is generally considered to be average or slightly above," he said. “Level 3 understands the importance of the indirect channel to its future growth, but the company hasn’t been able to execute on certain areas critical to channel partners (such as portal tools and training programs). We expect that this merger will result in a stronger channel program from the combined entity."

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