Vanco marks 20th birthday with acquisition talk

This year marks the two decades since Allen Timpany bought Vanco for a pound, but it's not planning on handing over its title as market leader anytime soon.

Vanco - which apparently means Value Added Network Company - was founded in 1988 when Timpany reportedly bought the company for just a pound. It took a few years and hundreds of thousands of pounds of his money before the idea took off, however. Timpany said he knew even back then the model would work. "We had a view how the market would pan out."

He seems to have been correct. In those twenty years, Vanco has racked up 700 carriers across 230 companies, boosted its staff from eight to over a thousand, and taken its annual turnover to £250 million. While so-called Asset Based Carriers (ABCs) have seen average year-on-year growth of 35 per cent lately, Vanco has chalked up 35 per cent. "We have a business model which changed the rules...we have improved the fundamental efficiency for part of the marketplace," Timpany said. "This is changing the industry."

Their first customer, British Car Auctions (BCA), is still with Vanco today, but they have moved from basic telecoms to using an IP network.

Indeed, their bandwidth has jumped by 30,000 per cent over that time, while their costs have fallen by fifth, Timpany said. "That customer was never out of place with the market... they never had the wrong tech or paid too much," he claimed.

The ability to cut costs is enough to stand any firm in good stead, regardless of the industry. But it's the flexibility with technology which could ultimtely deliver value for Vanco and its customers.

Forrester Research analyst Sharifa Amirah said ABCs will face trouble in the future as they must commit to a technology path, which could last as long as five or ten years. "It's a long-term commitment, a monogamous relationship to technology and skills," she said. And investing in the wrong technology these days could be enough to take a company down.

Timpany said: "I dont mind what the technology is. We pre-existed the internet... the technology is totally irrelevant."

Changes in the way the business world works won't hurt, either. Geographically-limited infrastructure owners paired with companies taking their business - and therefore their networks - global creates a gap for Vanco to fill, Timpany said.

Indeed, in the immediate future, Vanco believes the market looks strong. "The opportunities pipeline in the UK is the strongest that it's ever been," said UK managing director Andy Sumner.

But if it's such a lucrative model, why are there no other major players. Timpany said no competitors emerged until 2000. "We're 10 years ahead of any competitor - we started very early."

Noting that other VNOs are a tenth the size, Timpany said that if a strong competitor does emerge, Vanco is planing on buying them up. "We have a natural place as consolidator," he said. "We seek to acquire others in the industry we invented."

He cited the recent acquisition of Universal Access as example. It was turning over $45 million (£22.5 million) in the US market, an area where Vanco wanted to boost its presence.

While Vanco is the clear market leader for VNOs, it's more complicated when considered alongside similar businesses such as managed services and systems integrators, Amirah said. And she warned that a ten-year head start might not be as good as it sounds. "10 years back may not necessarily equate to 10 years forward," she said.

However, Vanco will be staying virtual. Timpany said he has no plans to change the company's model and buy infrastructure of any sort - including wireless spectrum. "I fundamentally don't think we need to own in order to procure effectively," he said.

For more of Timpany's thoughts for the future of his company, view the following video:

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