99.9% of Comcast's business revenue comes from domestic sales. Their network, salespeople, billing systems, support, etc are all domestic. All of the M&A that Comcast has ever done has been focused on strengthening its domestic offering. Here are the 2 shortcomings of Comcast Business’ business plan:
1) Comcast’s clients fall into one of 2 categories – 1. Clients with domestic locations or 2. Clients with domestic and international locations. Comcast’s ability to sell to customers inside their existing US cable is their strength. Their ability to sell outside of their current cable but still within the US is one of their weaknesses. Their ability to sell to clients outside the US is close to nonexistent.
2) Comcast’s security portfolio is limited. Comcast has a MASSIVE existing customer base and they’re currently capturing far less than 1 percent of overall security spend.
Enter Masergy. Masergy helps both of these problems. Comcast can tap into Masergy’s global network and extend its own fiber footprint. Masergy also brings a security practice that Comcast will delightfully tap into to increase customer wallet share. As security expenditures skyrocket and the cost of WAN, internet, and telecom lessens, it makes sense that Comcast would want to expand these offerings a bit more.
This acquisition was clearly strategic, with a focus on improving Comcast's customer portfolios. However, as with every merger & acquisition, it comes down to execution and culture. Most M&A results in a failure to fully realize the benefits of a combined company. Will Masergy employees adopt the Comcast culture? How do 2 entirely separate networks, NOCs, etc effectively combine? How does the jockeying for jobs with the combined company work out?
This Comcast merger makes sense on paper, but there’s a long road ahead. I remain skeptical of big acquisitions based on my experience.
Matthew
Former Worldcom, Verizon, Sprint, T-Mobile, Qwest, Centurylink, Lumen employee