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Cable Operators

Genband Eyes CedarPoint

11/08/2010 12:01 AM Eastern

Voice-equipment vendor
Genband is on the hunt
to increase its market share
in cable — and has its
sights set on Cedar Point
Communications, according
to industry sources.

Cedar Point, historically
focused on voice-over-
Internet-protocol solutions
for the cable market, has seen
its sales deteriorate in recent
years. The privately held
company maintains several
cable accounts, including
Comcast, Charter Communications,
Insight Communications,
Liberty Global and
Mexico’s Cablemás.

By picking up Cedar
Point, Genband — which
also is private — believes
it would have more scale
to challenge Cisco Systems
and others in the cable
segment, sources said.

“Genband has really followed
a merger path. They’ve
been rolling up companies,”
said an executive familiar
with the company.
“They have a real interest in
going after the cable space.
On the flip side, Cedar Point
has been struggling — they
have absolutely seen their
customers leave for different
vendors.”

Genband and Cedar
Point declined to comment.

In Genband’s biggest
deal to date, the company
last May paid a fire-sale
price of $182 million net for
Nortel Networks’ carrier
VoIP and applications business
unit. Nortel, a former
telecom-equipment powerhouse,
filed for bankruptcy
in January 2009. Its major
cable customers for digital
voice systems had included
Cox Communications and
Rogers Communications.

With the Nortel Carrier
VoIP and Application Solutions
(CVAS) business,
Genband more than quintupled
in terms of sales and
headcount, growing from
about 400 to 2,200 full-time
employees. Genband is on
track to clear $800 million
in revenue for 2010 on a
pro-forma basis compared
with $140 million in annual
sales previously, according
to the company.

JP Morgan, which funded
Genband’s acquisition
of Nortel CVAS through
its One Equity Partners investment
arm, also owns a
stake in Cedar Point. STAR
Ventures also is an investor
in both Genband and
Cedar Point.

Cedar Point, with about
200 employees, would
be a small acquisition
for Genband compared
with the Nortel CVAS
deal. One source indicated
Genband is looking
to clinch a deal within a
matter of weeks.

Another industry source
said Cedar Point had hired
Boston-based investment
bank America’s Growth
Capital earlier this year to
evaluate various “liquidity”
options, including a possible
sale.

September