Integrator 2e2 and carrier O2 are considering extending their joint venture beyond its initial five-year term, ChannelWeb can reveal.
The duo last January formed O2 Unify, an outsourced IT and comms joint venture that sees O2's 500-strong UK corporate salesforce punt 2e2's IT services to its customer base.
According to 2e2, the joint venture generated £18m in sales in its first year, a figure that is expected to increase fivefold in 2012, while contracted sales reached nearly £60m.
In 2011, O2 Unifiy yielded 16 new-name customers for 2e2, including G4S and Network Rail.
2e2 business development director Nick Grossman said extending the duration of the partnership would give customers peace of mind.
Globally, the joint venture is O2 parent Telefónica's fastest-growing business, Grossman (pictured) said.
"We set it up for five years and there are some discussions about extending it even now, to give customers some comfort," he told ChannelWeb. "Some are asking, ‘why would I sign up for five years if the partnership has only three years left to run'?
"It is a natural conversation that comes up given we are all pretty pleased with the first year and the fact that it is getting increased momentum this year."
2e2 rose rapidly from obscurity to become one of the UK's largest resellers on the back of a series of acquisitions that took in the likes of Morse, Compel and Netstore, last year turning over £396m.
But Grossman said 2e2 is increasingly turning to big-ticket organic initiatives such as O2 Unify to boost its top line, given the fraught M&A climate.
"Acquisitions are more difficult in the current environment," he said. "You need a strong business case, as the banks want to be absolutely sure it is not going to distract you from your existing business plan.
"O2 Unify is one of a number of initiatives we have to create a step change, rather than a linear increase, in our revenue."
Neither would it be a good time for private equity-backed 2e2 to sell up, Grossman added.
"We live in a world where valuations are depressed and therefore it is not an obvious time to sell a business," he said. "If you have a good business and you run it well, you do what we have been doing and keep your head down and get on with it. At some point there will be an event, but I suspect it will not be in the immediate future."
Market chatter suggested 2e2 has recently shed staff from its security division but Grossman stressed this was not the case. Various managers have been reshuffled around the business as 2e2 reorganises itself by vertical, rather than technology, he said, adding that the firm has recruited more than 100 UK staff in total over the past 18 months.
"Security continues to perform well and we are very pleased with it," he said.
"Everyone talks about cloud computing being the new black but when you look at the market stats, it will still only be a single-digit percentage of the total market [in a few years' time]. But a lot of people are interested in how to position themselves for cloud, and security is an absolutely crucial part of that. If you are going to be storing things remotely, having the right security is more important than ever, so it will always be a key part of our strategy."
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