5 Big Things To Know About Comcast’s Masergy Acquisition

In a blockbuster deal announced Wednesday, telecom giant Comcast acquired hybrid networking player Masergy. Here’s what partners need to know about how the deal.

Telecom Shakeup

Comcast Business on Wednesday revealed plans to scoop up Masergy Communications, a channel-first hybrid networking and SDN specialist. The deal will give the cable giant more software-defined networking muscle at a time where SD-WAN and cloud-based everything are in high demand.

The acquisition will also help Comcast build up its cloud-based security and UCaaS repertoire as its folds in Masergy’s impressive product portfolio. But while the deal, if approved, would be a massive win for Philadelphia-based Comcast, it could be a loss for partners if Masergy’s channel-friendly nature falls by the wayside. The company this summer discussed how it upped its channel focus over the last year, even describing the move as “throwing gas” on the channel.

Here are five things that we know about Comcast’s planned acquisition of Masergy and what channel partners should know.

Masergy’s Channel Momentum

Plano, Texas-based Masergy has been channel-first since day one, but the company “recommitted” and stepped up its focus on partners even more last year when it introduced its Zenith Partner Program and brought on its first-ever senior vice president of global channel sales in the form of telecom veteran Jim Glackin. In fact, Masergy in July said its channel sales were up 70 percent year over year.

“You’re going to see us pivot more deeply into the mid-market with the digital agent community. We think that that will continue to have significant growth with existing partners. We’re actually looking to embrace hundreds, if not 1,000 new partners here over the next two to three years,” Masergy’s CEO Chris MacFarland (pictured) told CRN in July.

One Masergy partner who spoke to CRN under the condition of anonymity said they are hoping Masergy sticks to its channel-friendly roots. That’s because the company is doing more than 80 percent of its business today through partners. Comcast, for its part, has been trying to penetrate the larger enterprise market, a space that Masergy is in today.

Masergy’s Large Enterprise Success

Masergy counts more than 1,400 customers across 102 countries, including some of the world’s largest companies. Masergy’s logos include including the likes of biotechnology giant Amgen, online

Genealogical company Ancestry.com LLC, and payment service provider Ingenico. And because the company does most of its business through the channel, partners are in many of these large accounts.

For comparison, Comcast as of 2017 was generating about 70 percent of its business services revenues from the small business segment, but the company hasn’t been shy about its plans to go after larger enterprises. As of 2021, however, small- to midsize-businesses were still driving the bulk of the revenue success in the Comcast Business segment.

Comcast in a statement on the deal said that the acquisition will accelerate its growth serving large and mid-size companies, particularly for U.S.-based organizations with multi-site, global operations.

Comcast SD-WAN

Comcast Business in 2017 revealed its first software-defined networking platform and application for advanced network management. SD-WAN was the first service that the then-new platform was powering. SD-WAN was a brand-new revenue stream for Comcast, which never sold MPLS, and the cable giant hoped it would reel in “bigger fish,” master agent and Comcast partner Telarus said at the time.

Flash forward to 2021, partners told CRN that Masergy offers higher margins on SD-WAN services when compared to Comcast. But via the newly announced deal, Comcast will inherit Masergy’s SDN portfolio. The combination of Comcast Business’s robust fiber network and Masergy’s innovative services will let Comcast customers manage their international operations and networks more efficiently and securely, according to the two companies.

“Masergy provides a perfect complement to our portfolio of enterprise services and solutions and will allow us to instantly and dramatically amplify our growth in the global enterprise market,” Bill Stemper, president of Comcast Business, said in a statement on the deal.

Comcast’s Balance Sheet

There’s no denying that Comcast, a Fortune 50 telecom titan that pulled in revenue of more than $103 billion in 2020, has a balance sheet that can easily pump more resources into Masergy, which was acquired by private equity firm Berkshire Partners in 2016 for an undisclosed price. The company’s annual revenues are not public.

On the other hand, Masergy is bringing residual-based business to Comcast. These businesses have only gone up in value recently across the board.

Moving Forward

Comcast’s acquisition of Masergy is still subject to regulatory approval. If and when the deal is closed, Comcast said it looks forward to welcoming Masergy’s employees and leadership, signaling that the Masergy team will be joining the telecom giant, at least for the short-term.

Jim Glackin (pictured), senior vice president of channel at Masergy told CRN in a statement that Masergy is “so excited” to join Comcast Business. “We both have complementary services that businesses of all sizes need to compete in the market and our partner first approach is completely aligned,” he said.