Verizon Business announced Monday that it has reached an agreement to acquire privately-held managed security services provider Cybertrust. The financial details of the transaction are not being made public. The acquisition is due to close in the next 60-90 days, following regulatory approvals.
Ovum VP of US Enterprise Practice Jan Dawson comments:
This announcement is important for two reasons. First, Verizon Business (and other global providers) have lagged behind AT&T in the security space for some time. Although all the major providers have actively pursued the security opportunity, none has been able to tell as convincing a story, especially around network-based security, as AT&T. Verizon Business' previous acquisition in this space, the purchase of NetSec for $105 million by the former MCI in January 2005, was significantly smaller. Cybertrust is several times larger (no doubt the purchase price is too), and this acquisition should catapult Verizon Business into a much stronger position on security.
Second, Cybertrust has a well balanced footprint globally, with a strong presence in Europe and Asia Pacific as well as North America, in contrast to NetSec's domestic
Now for the hard part: the integration of all that Cybertrust offers within the Verizon Business portfolio. Although the obvious due diligence work has already been done, integration planning started on Monday, and this will likely take some time. Verizon Business will have to strike a careful balance between quickly bringing the benefits of the acquisition and the expanded portfolio of services to its customers and ensuring that the maximum value from both sides is preserved during the integration process.
There are some valuable new capabilities here for Verizon Business: for example, Cybertrust's identity management, forensics and PCI capabilities. At the same time, attaching what Cybertrust does to the Verizon Business network will allow the company to work from a much broader base of data about threats and trends, something that should enhance its offerings.
Tight integration into the network services business will be crucial, however, and doing this through acquisition will always be challenging. One reason why AT&T has been so successful in establishing a perception of leadership in this space is that it has been able to tell a convincing story about the security being essentially built into the network. Cybertrust doesn't have a network-based approach to security, and the challenge for Verizon Business is to integrate the Cybertrust assets in such a way that they become integral to its network, which will be no small feat.
Another interesting wrinkle is that Cybertrust has been a partner to numerous network operators, not just Verizon Business. Orange Business Services, BT and Vanco are all listed as partners on the Cybertrust website, and it's likely that others, too, relied on Cybertrust as a partner for security services.
Although Verizon Business is open to continuing these relationships after the acquisition, it is not clear whether the other carriers will feel comfortable buying these services from a competitor. However, this clearly wasn't the main driver behind the acquisition. From Verizon Business' perspective this acquisition is about demonstrating its commitment to security and the global marketplace, and this is an excellent way to go about doing that.
Jan Dawson is based in Boston.