With rumors flying on Verizon (NYSE:VZ) and AT&T (NYSE:T) partnering up for bid on Vodafone Group (NASDAQ:VOD), I thought it would be good to highlight the benefit, though not immediate, to Tangoe (NASDAQ:TNGO).
The TEM space is still very much fragmented but Tangoe has distanced itself from the pack, both through acquisitions and through organic growth (somewhere on the order of mid-to-upper teens organic in 2012). The bears will focus on the acquired customer growth (not a big deal to me as I laid out in my other post) and the large threat from competition. This 'threat' has baffled me as TNGO has done a great job of partnering with many majors (AT&T, Dell (NASDAQ:DELL), IBM (NYSE:IBM), Xerox (NYSE:XRX), SingTel, etc). Some bring up Accenture (NYSE:ACN) as a threat, yet Tangoe even partners with it in certain situations. The fact remains that Tangoe has been distancing itself from the competition in size, geography, and feature set.
Vodafone was the outlier. It has a credible offering and has good traction outside the US. Its size is unknown but I suspect that it is of similar size to Tangoe's international business. I do not know that for certain. That is a guess.
However, if VOD is bought by VZ and T with VZ getting the US wireless business and T the international business, one will need to reflect on how this will impact VOD's TEM product line. Can you imagine how long the process to VOD will be for T? How many countries will need to sign off on it? Financing fears given the tenderness in the credit markets, etc?
This will not be a painless or fast process. I would figure the better part of a year (again, just a guess). And then comes the integration process. T has international operations. It is not practicable to assume that the lines of responsibility will be clean at first. Management jockeying will take some time. Setting priorities will take time. It is not unrealistic to assume that VOD will suffer from an identity crisis for a period of years. And that T has recently partnered with TNGO for both fixed and wireless TEM should make for some additional fear within the VOD TEM practice.
And the impact on signing up new TEM customer for VOD? It's a pimple within the organization. Do you think prospects will want to commit to a very long engagement with VOD when the outcome of their fate is so uncertain? I think not. This will be a large benefit to Tangoe's international efforts right when they are starting to heavily invest in those markets.
I suspect that the mood is a little happier with Tangoe this morning given this news. I also suspect that the international salesforce may be changing up their pitches in an effort to further distance their product from what was/is a respectable competitor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.