NEWS INTERVIEW Chess secures millions


In a fragmented market such as telecoms acquiring businesses is a sharp way to make a mark on the industry. Notably, Chess had already made its stamp but with a £21 million banking facility from Barclays Corporate under its belt the company is braced for a near frantic period of acquisition activity this year.


Richard Btesh T


he £21 million banking facility is highly significant and is a testament


to the success of Chess’ acquisition and integration strategy and how it has evolved over the last five years. According to Director Richard Btesh, the man who leads Chess’ buying sprees, the next round of funding will amount to a bigger war chest that aligns with the firm’s focused campaign for


remarkable growth. “Chess is one of the most successful consolidators of the telecoms market having made over 50 acquisitions to date,” said Btesh. “The loan means we can move up the deal size ladder and bring on larger customer bases, wider product sales and strategic acquisitions, as in the case of ebillz. We’ll also continue to focus on our core position as a leading consolidator of small to mid-sized resellers.”


We can move up the deal size ladder


22 COMMS DEALER MAY 2011


Established in 1993 Chess offers a communications product portfolio including mobile, fixed line and calls, broadband, VoIP and data. “Our core products remain calls (including NGN), lines, broadband, data and wholesale,” added Btesh. “In the future we expect to widen this to include acquisitions of ISPs and system maintainers. The funding received from Barclays demonstrates the success of our strategy of acquiring small to mid- sized telecoms businesses. Barclays demonstrated a clear understanding of our sector. Spending £21 million in 2011 should keep me busy.”


One acquisition per month plus the occasional buyout of wholesale partners is Btesh’s ideal spending rate, but in reality he expects to make between 10–12 acquisitions this year. His acquisition strategy continues to be based on paying fair prices for good businesses that complement Chess’ product mix and culture. At any one time Btesh may be reviewing 10 to 15 targets with selection criteria driving completion in the right direction. He noted: “The low barriers to entry into


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the telecoms market means that many smaller businesses can service a limited number of customers, but as customer demands become more sophisticated many resellers consider selling.”


Fertile ground Sectors that are not classed as mature markets with a handful of bigger players and a collection of smaller businesses are fertile ground for growth by acquisition. Not surprisingly Btesh expects a significant uplift in M&A activity this year in the telecoms space. “Consolidation continues at a rapid pace,” noted Btesh. “Technological sophistication is increasing with the result that smaller businesses will struggle to offer the price and product range of larger telecoms providers. There is increasing demand from resellers to realise capital from their existing business, reinvest it into new areas, then to potentially return at a later date to sell a second time. Our acquisition process is so simple that in the last couple of years six or seven of the telecoms resellers from whom we’ve purchased a customer base have returned to us to sell us their new bases.”


The £21 million banking facility was arranged by Barclays Corporate in Manchester led by Richard Faulkner, Relationship Director, Technology, Media and Telecoms at Barclays Corporate. He commented on the deal: “Our industry focus and thorough understanding of the telecoms sector has enabled us to structure a finance solution that fits well with Chess’ acquisition strategy. We’re delighted to support a fast growing, profitable company and the funding from Barclays will allow them to maximise their potential in 2011.”


David Pollock, founder and Chief Executive of Chess Telecom, pointed to some significant areas of growth potential. “Despite the active consolidation last year there are still over 1,000 telecoms businesses selling calls, lines, broadband, data and maintenance to UK businesses,” he explained. “Generally, there are only low barriers to entry into the telecoms market, but increasingly sophisticated customer demands and high levels of attrition have created a natural consolidation model.”


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