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60% increase in employment expected

ITC-DeltaCom/Scientific Telecom deal close to done

GREENWOOD — ITC-DeltaCom’s purchase of the business assets of Greenwood-based Scientific Telecom is expected to be finalized Aug. 16. But unlike many acquisitions that cause layoffs, ITC-DeltaCom expects a 60% increase in employment in Mississippi after the purchase of Scientific Telecom is complete.

Scientific Telecom, one of the largest privately-held telecommunications equipment vendors in Mississippi, had sales of about $3.1 million in 1998. The company currently employs 30 people, and has offices in Greenwood, Jackson, Hattiesburg and Tupelo. The company has either installed and/or is maintaining 75,000 telephones served by 12,500 lines in Mississippi.

Scientific Telecom President Allen Wood Jr., who will join ITC-DeltaCom management after the purchase of Scientific Telecom, said the purchase will benefit Mississippi customers by giving access to a single provider for all business communication services including telephone equipment, long distance service, video teleconferencing, Internet and operator services, and local exchange service.

“So as far as I know, we are going to be the only company in Mississippi that is going to have all those services provided by one company,” Wood said. “Our customers will have one telephone bill and one technician instead of three or four from different companies. It will be a powerful combination. Customers want Humptey Dumptey back together again like the old AT&T system. They want one company to deal with, but they want competitive pricing.”

Andrew M. Walker, vice chairman and chief executive officer of ITC-DeltaCom, said the acquisition of Scientific Telecom by ITC-DeltaCom is a natural move in the company’s effort to provide the best service to business customers in Mississippi.

“With our fiber network and data switching capability throughout the South, we already offer customers one of the most robust and reliable network infrastructures available,” said Walker, whose company is headquartered in West Point, Ga. “Now, with the addition of Scientific Telecom, we will add enhanced convenience and expertise to our arsenal of telecommunications operations.”

A recent article titled “Mississippi Churning” published in Interactive Week, the Internet’s newspaper, said that regional carriers like ITC-DeltaCom are giving big companies like MCI WorldCom a run for the money by using small-market savvy to grab business customers away from the big boys — sometimes in their own backyards.

“Jackson, Miss., may be Bernie Ebbers’ world headquarters, but Foster McDonald says it’s his home turf,” said the article by Rachel King. “The president of ITC DeltaCom says Ebbers and his MCI WorldCom just don’t do a good job of meeting the telecom needs of their smaller business neighbors in Mississippi’s state capital.”

“Jackson is a secondary market to WorldCom,” says McDonald. “In Jackson, we have a bigger presence looking after customers than MCI WorldCom. They are good at product development, sending direct mail and telemarketing, but they don’t put the people out there.”

The article said that in small markets in the U.S., regional operators such as CapRock Communications, GST Telecommunications, ITC-DeltaCom and McLeod USA are wresting a big chunk of the coveted small-to-midsized business market away from the major national carriers.

ITC-DeltaCom provides integrated telecommunications services to mid-sized and major businesses in the South, and is a regional provider of wholesale long-haul services to other communications companies. The company operates 24 branch locations in eight states, and has a 7,800-mile fiber optic network in 10 states. ITC-DeltaCom has interconnection agreements with BellSouth, GTE, Southwestern Bell and Sprint for resale and access to unbundled network elements, and is a certified competitive local exchange carrier (CLEC) in all nine BellSouth states.

Wood said the telecommunication industry has gone through several major revolutions. The first wave was deregulation of the equipment portion of the business. Then the long-distance monopoly was broken up. The third revolution was deregulation of local service.

“While that technically occurred a couple years ago, it is just now beginning to crank up in the marketplace,” Wood said. “There are two more revolutions going on. One of them on the equipment side is CTI, computer telephony integration. This integration of computers and telephone systems allows all kinds of data to be transferred back and forth which is very powerful in businesses serving customers. The last, and not least, revolution is the Internet, and it is going to revolutionize all of our lives. It is already doing it. E commerce is growing at a fantastic rate.”

Wood said that sales of Scientific Telecom assets to ITC-DeltaCom was a natural evolution for Scientific Telecom.

“We are living in a world of increasingly complex technologies which hold tremendous benefits, but a service provider is faced with daunting challenges,” Wood said. “This present revolution requires size, and a combined offering of network and equipment services, coupled with voice and data expertise, which simply was not the case in the past. How then could Scientific Telecom accomplish such growth, training, and product breadth to fulfill its mission? The answer was to align ourselves with a company, of similar service philosophy, which has all the components to excel in the new environment.”

“We feel that joining these two fine companies will give the most powerful presence in Mississippi for our customers. The merger is truly a win-win-win move for our customers, for ITCD, and for us.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com.

About Becky Gillette

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