Gen-i won't disappear, says Telecom

By PETER GRIFFIN

Telecom may have scooped up IT services company Gen-i in a $62.5 million deal, but the new acquisition is not about to disappear into the Telecom fold.

Chris Quinn, the head of Telecom Advanced Solutions (TAS), who is now responsible for 1300 people with the Gen-i purchase, said the Gen-i and TAS sales teams were not yet working together on bids, but would in the next two months.

Gen-i would retain relative independence because its existing customers demanded it.

"We're not going to make this a big joint proposition. What [customers] wanted was Gen-i and they're going to continue to get that," said Quinn.

Quinn considered Gen-i a good buy because there was little overlap between the company, which specialised in systems integration, thin client computer systems and desktop computer support, and TAS, which focused on managed network services.

As a result, the acquisition had resulted in no redundancies.

While TelstraClear chief executive Rosemary Howard told the Herald last week that she was unwilling to meet the price Telecom paid for Gen-i because she thought it was too expensive, Quinn was confident Telecom would recoup its investment.

"I don't think we got a bargain, I think we got a good deal. We're confident we'll get the returns that match the price we paid," he said.

"The analysts aren't saying we got a bargain, but no one's saying Telecom got ripped."

The top bid from TelstraClear is understood to have been around $2 million lower than the $62.5 million Telecom eventually paid for Gen-i.

Quinn said the acquisition was important for two reasons: it marked Telecom's recovery of confidence after the failure of Esolutions, and it injected some much-needed resources into Telecom's IT presence after 18 months of rapid growth.

"We were starting to get pretty stretched keeping up with the demand we were generating," he said. "And after Esolutions, it was fair to say that people questioned whether we could be credible in this market."

The combined TAS and Gen-i operations would give Telecom the opportunity to pursue bigger IT contracts, but it is unlikely to be tendering alongside the likes of EDS and HP for the country's biggest deals.

"EDS' role is very much inside the top 10 corporates. Gen-i will have the capability to serve everything below that and to play a role in those top 10," said Quinn.

"I'm sure we'll come up against Datacom. But their business is more skewed towards software development and ours more towards services," Quinn added.

He said he was open to further acquisitions in the IT services business, but was concentrating on tying up the Gen-i buy.

In Australia, the Telecom and Gen-i sales teams would also collaborate on pitches but maintain structural independence.

"My business in Australia is as much a start-up as Gen-i's business. They're enjoying having a bit more resourcing to go after things."