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Into the cloud: Mitel's life as a 'powerhouse'

Ottawa-based Mitel closed its $392-million friendly acquisition of Concord, Ont.’s Aastra Technologies Ltd. at the end of January.


With the merger of two of Canada's biggest business communications companies, Mitel Networks Corp. chief executive Rich McBee hopes to lead a homegrown technology outsourcing "powerhouse" with a much larger footprint worldwide.

Ottawa-based Mitel closed its $392-million friendly acquisition of Concord, Ont.'s Aastra Technologies Ltd. at the end of January, creating a company with more than $1-billion (U.S.) annual revenue and more than 60 million customers worldwide. Investors reacted positively to the deal, with shares rising nearly 50 per cent on the Nasdaq since the deal was announced in November.

It's a global play with long-term payoff for the expanded Canadian company, Mr. McBee says, as the merger fills technological gaps and vastly increases the scale with which it can offer seamless suites of telecom products to the global business community – which increasingly demands employees be constantly connected.

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Simplifying the complicated web of telecommunications for businesses is Mr. McBee's key selling point for the company, whose services include voice mail and call-forwarding, and call-centre software that clients are increasingly outsourcing storage for. The traditionally on-premise technology company is following demand, gradually moving to off-site, "cloud" technologies, which now make up 10 per cent of Mitel's revenues.

"What we really spent a lot of time working on is having a seamless path between technologies to protect the investment that a customer's made," Mr. McBee told The Globe and Mail in an interview in Toronto.

According to telecom analysts MZA Ltd., the combined company's global footprint makes it one of the top five vendors in the business telecom world, with the largest market share in Western Europe for five of the last seven quarters.

From here, Mitel hopes to position itself to enter even more markets, including Asia. Since cloud storage for communications has yet to gain much traction in markets outside North America, the worldwide foothold will have long-term spinoff. Mr. McBee hopes to show that Mitel and Aastra were "two Canadian companies who came together in a very complementary way to create, really, a powerhouse on a global stage."

Mr. McBee joined Mitel in 2011, soon after the company's trip-and-fall 2010 initial public offering on the Nasdaq, which saw shares fall to less than half their $14 listing price within six months. (The company cross-listed on the TSX in 2012 to attract more Canadian investors.)

As soon as Mr. McBee jumped aboard, he began a tour of client visits to see how Mitel could revise its corporate strategy, eventually consolidating its product line, focusing more on moving to the cloud and strengthening its contact-centre holdings.

Getting a bigger global footprint was also on Mr. McBee's list, but he wanted to wait for the right moment. "Planting your flag in Europe and trying to grow organically is very difficult," he says. Acquiring Aastra, which had Western Europe in a stronghold, helped the company expand beyond the Americas.

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Moving to the cloud allows businesses to outsource their telecom needs and move to pay-as-you-go fee structures that free them from owning technology or requiring costly call centres; Mr. McBee intends to be at the forefront of that.

There's a story the oft-travelling executive tells about his rare downtime at home in Dallas: He's sitting in his den with his two cellphones and iPad in front of him, a laptop open and a teleworker at his side, and he gets a phone call. "Everything rang – they all rang at the same time," he says. "And my wife looks at me and says, 'Really?'"

"But if you want to be, you can always be connected."

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