​EXCLUSIVE: Why Spark bought CCL…

Tim Miles - CEO, Spark Digital

Spark New Zealand’s $50 million acquisition of Christchurch-based Computer Concepts Limited (CCL) will provide a key geographical boost as the telco aims to cement its position in the South Island market.

As reported by Computerworld New Zealand, Spark signed a conditional agreement to acquire the privately-owned IT infrastructure company to add to its cloud capabilities, while at the same time extending the telco’s market reach across the country.

Spark Digital CEO Tim Miles, when speaking to Computerworld New Zealand, says that the move ticks a geographical box for the company, as it looks to capitalise on CCL’s strong market presence south of Wellington.

“Yes, it was a very important factor,” Miles says. “There is a very vibrant community in the South Island and CCL has performed incredibly well and has a strong association to the market which is crucial.”

Miles says CCL’s performance during the Christchurch earthquakes in particular, showcased the credentials of the managed service provider, which completed the build of its largest data centre, in Christchurch, three months prior to the first disaster in September 2010.

During the earthquakes, and from a technological standpoint, the city was impacted by fibre and copper communication breaks, an overloaded mobile infrastructure and mobile network operators going into emergency calls only.

To add to the disruption, many businesses throughout Christchurch had no access to office space with limited access to key company data and information, as well as clear damage to infrastructure and hardware.

In utilising the company’s backup and disaster recovery services, CCL - led by Chief Technology Officer Jon Waite - worked closely with those impacted to evaluate risks to infrastructure and ongoing operations, drawing on experience from on-site professional services and hosted data centre services from six New Zealand locations.

“CCL did a great job for Christchurch and frankly the South Island during that time,” adds Miles, speaking to Computerworld New Zealand from Christchurch, following the announcement. “We poured resources into the area to keep the infrastructure going and we know what they did, and we’ve admired their approach for a number of years.”

From a business perspective, Miles says the deal will have no disruption for CCL customers, who now have access to the capabilities of the wider Spark portfolio.

“We want to make sure that CCL can not only bring their capabilities to the table, but actually that of the broader Spark family,” he adds.

“The private shareholders have done a great job so far but we obviously have a deeper set of pockets and we have a lot more resources so if we see a growth opportunity, we’re in a position to more rapidly fund this for customers in the South Island."

Complimentary

While the deal makes sense from a geographical standpoint for Spark, the company already has a strong footprint in the South Island, with around 1,000 members of staff across five locations - Blenheim, Canterbury, Dunedin, Nelson and Otago - and data centres in Christchurch and Dunedin.

Since opening its flagship data centre in Takanini, Spark Digital has pumped over $200 million into its cloud services, including the acquisition of cloud providers Revera and Appserv, the building of a Christchurch data centre to support the rebuild and an upgrade to the existing Dunedin data centre.

Miles says the acquisition will compliment the telco’s previous purchases, in particular data centre company Revera, which was bought for $96.5 million in April 2013.

“Both businesses have complimentary strengths and they make a good combination,” adds Miles, alluding to the area of platform IT services and cloud computing. “We’ve poured a lot of money into Revera and it is tracking along very well.

“For CCL, they are strong in the services area and employ a lot of specialists within the Service Desk space to support their clients.

Page Break

“The CCL model is slightly different to what Revera is doing but we believe there is a place for both.”

Cloud

Miles says the acquisition is consistent with Spark’s strategy to become the no.1 provider in the fast-growing cloud market in New Zealand, a market that currently encompasses many areas and industries.

“The cloud market is very fragmented,” Miles says. “If you look at cloud in context, you’ve got the public cloud providers such as AWS, Google and Microsoft, with IBM also trying to get into that space.

“Plainly that’s the biggest part of the cloud market and we’re not going to be with them in that respect, but we are looking to scale our locally hosted capabilities.

“We believe New Zealand businesses going forward will want to mix and match some their workloads. Some are happy to have them in the public cloud, others are happy to have them onshore, with lots of determining factors such as response time, data sovereignty and local support.

“Through our family, we can cater to those needs.”

Of course, there are many cloud providers in not only New Zealand, but across the world, yet Miles believes CCL’s expertise within the hybrid cloud, service desk and project management services space will be a major boost to Spark’s digital offerings.

“If you look at the core telecommunications and IT platforms required to run a digital business, we want to be in a position to provide that,” Miles adds.

“All of the big investments Spark has made centre around this strategy of supporting those digital platforms for New Zealand businesses.”

Acquisitions

Looking ahead, Miles says Spark has no immediate plans to add to the acquisitions of Revera, Appserv and CCL, insisting the company has “nothing on the go at the moment.”

But while nothing is on the table at present, Miles admits that approach could change in the future, should the opportunity arise.

“Our track record suggests that if we see an opportunity for a step change in capability, or we require more capacity, then we obviously look favourably upon that,” he adds.

“If you look at what we’ve done over the past few years, we’ve invested heavily in being able to provide managed infrastructure.”

Terms of the acquisition - much like Revera - will see CEO Andrew Allan, alongside Managing Director Darryl Swann, continue to run CCL as a standalone business, a move Miles believes is critical to the future success of the company.

“We plan to manage CCL very much in line with how we’re running Revera,” he adds. “It’s crucial to leave them with their own brand and culture, and to stand behind them and support them going forward.

“We want to be able to provide the resources to help CCL do things more quickly and better, and we also have that model with Revera.”

For Miles, the company remains “very clear” on its strategy of maintaining the status quo following large acquisitions, and recognising the different pieces of the Spark puzzle.

“Spark is about having our core business but around that, a portfolio of brands,” he adds. “The old Telecom would have been more likely to bring those businesses in and make them all like Telecom, with varying degrees of success.

“But the way we are operating now is different. When we acquired Revera, we looked at their strong culture and didn’t want to mess with it.

“CCL is the same. Andrew, Darryl and I are very clear about wanting to preserve that culture and provide the independence to run as a standalone business.”