Avaya to extend mainland reach

PUBLISHED : Monday, 08 August, 2011, 12:00am
UPDATED : Monday, 08 August, 2011, 12:00am


Enterprise communications systems provider Avaya will pursue expansion activities on the mainland, nearly two years after it bought a key business unit of bankrupt rival Nortel Networks Corp.

'We aim to put more resources in the mainland,' said John Wang Yun, the managing director of Avaya Greater China.

That would include establishing new offices across the country, boosting its distribution channel, and increasing recruitment of skilled employees in research, marketing and consulting services, said Wang, who heads United States-based Avaya's mainland, Hong Kong, and Taiwan operations.

He declined to elaborate on privately held Avaya's investment plan for the mainland owing to the proposed public listing of its parent firm.

Parent Avaya Holdings in June announced an initial public offering in the United States to raise as much as US$1 billion. Some of the net proceeds are expected to pay down long-term debt.

It would be the second public listing involving Avaya, which was the business communications unit spun-off by telecommunications equipment maker Lucent Technologies in October 2000. Lucent merged with French firm Alcatel to form Alcatel-Lucent in 2006.

Private-equity firms Silver Lake Partners and TPG Capital acquired Avaya in October 2007 for US$8.2 billion.

Since being privatised, Avaya has restructured its operations to become focused on five business segments: so-called unified communications software and hardware, real-time video collaboration, contact centre, data networking, and related integration applications.

It was another acquisition that led Avaya back on a growth path, especially on the mainland, during its fiscal year ended September 2010.

In September 2009, it won an auction for the enterprise solutions business of Nortel for US$900 million. It completed that acquisition in December 2009, with about 6,000 former Nortel employees joining the company.

'A big part of the 33 per cent year-on-year total revenue growth in Avaya's Asia-Pacific business in the past fiscal year was driven by that Nortel acquisition,' Wang said. The company benefited from an expanded partner and distribution network, a broader product portfolio, more customers, and a greater ability to compete globally, he said.

Avaya, which has its global headquarters in New Jersey, has introduced more than 60 new products to the market since last year. It counted more than 400,000 corporate customers worldwide.

'We extended our sales coverage from the five major cities on the mainland to about 14 provinces and second-tier cities,' Wang said, adding that Avaya had also widened its coverage of industries on the mainland since last year to include the utilities, government, hospitality, transport and internet services sectors.

Fast-growing online travel services provider Ctrip.com, for example, has used Avaya for its Nantong City contact centre in Jiangsu province. Ctrip.com started with 2,000 agents at the centre in November last year, but forecast high demand will see that number rising to 12,000 in five years.

Another big customer is Alibaba Group, which runs leading online shopping operator Taobao and Hong Kong-listed business-to-business e-commerce provider Alibaba.com.

Avaya, meanwhile, has remained strong in the financial services and telecommunications industries, where all the major domestic players are customers, Wang said. Its largest competitors on the mainland included Huawei Technologies, ZTE Corp, Cisco Systems and Alcatel-Lucent.

Wang said that the company's various offerings targeted rising domestic and international business opportunities.

Avaya estimated that the total global market for business collaboration and communications systems, contact centre applications, and data networking equipment, as well as support and maintenance services, could attract up to US$77 billion of worldwide spending this year.

In a report, Ovum senior analyst Ian Jacobs said: 'We believe that Avaya's strong market penetration in the core contact centre infrastructure market places the company in a unique position to expand its services revenue stream.'

Avaya's revenue for its last fiscal year and the six months to March this year reached US$5.06 billion and US$2.76 billion, respectively. However, it posted a net loss of US$871 million and US$612 million in the periods, respectively.


The amount per share, in US dollars, that Silver Lake Partners and TPG Capital paid to Avaya shareholders to privatise the firm in 2007