What’s Ahead for the Windstream-PAETEC Channel?

With Windstream Corp.’s acquisition of PAETEC expected to close this week, indirect sales agents for the two companies may be wondering what’s in store for the channel.

John Leach, executive vice president of business sales for Windstream, offered a few hints during a panel discussion earlier this month at the PlanetOne Communications channel event. The indirect sales channel is “going to be a significant part of our revenue going forward,” he said. Presently, he estimated about 35 percent of revenue comes from the combined indirect sales channel.

The Windstream-PAETEC deal will create a company with estimated annual revenues of $6.1 billion and EBITDA of $2.4 billion, with 70 percent of revenues deriving from business and broadband sales. The Federal Communications Commission approved the acquisition Nov. 22, paving the way for its closure, which is expected by Dec. 1.

Leach told an audience of PlanetOne agents  Nov. 9 that they should be able to sell both company’s networks on-net by  June 2012. “We are getting such a more vast footprint with the PAETEC acquisition that it’s really critical that we get those networks intertwined as quickly as possible so that the [PAETEC] sales channels can sell the Windstream locations as on-net and Windstream can sell PAETEC locations on-net,” he said. “That work and planning can go on before the integration because we can set NNIs up between the networks in a wholesale relationship. That has been done.”

While the company’s networks largely are complementary,  Leach said there is overlap among the staffs and there likely will be consolidation among the channel managers. He did not say how many would be impacted.

These cuts do not mean less emphasis on the channel, however.  “We are very positive on what we think the outlook is [for the channel],” he said, noting that Windstream’s indirect channel is outperforming 2011 projections.

“We think there is a whole new sector going into cloud and virtualization, managed services that have been either not penetrated or lowly penetrated,” he added, citing an opportunity for traditional telecom agents as well as newer partners like VARs and integrators.

Windstream provides high-speed Internet, voice and digital TV services to residential customers in 29 states and the District of Columbia. The company also provides various communications services to businesses and government agencies. As of Sept. 30, Windstream supported 1.35 million high-speed Internet customers, 449,000 video customers and 3.22 million access lines.

The business-oriented PAETEC provides services in 48 states and the District of Columbia to roughly 51,000 business customers based on third-quarter results.

Additional reporting by Josh Long.

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