Tough times for telcos

As two resellers go under, channel warned to expect more of the same

Two telecoms resellers entered administration last week, with experts warning that the telco channel could expect more tough times.

Alternative Investment Market-listed Convergent Communications, based in York, and two of its subsidiaries were granted an administration order last month. Hunter Kelly and Garry Wilson of Ernst & Young were named as administrators.

The order was granted after a petition from Convergent's directors. Discussions about the sale of the firm's last remaining trading subsidiary, Convergent Telecoms, broke down and creditors presented the court with winding-up petitions.

Ruislip-based Eclipse Telecom also went into administration, with Robert Horton and Anthony Murphy of Smith and Williamson the administrators.

"It is a very high-risk market for telecoms VARs and there will be further consolidation," said Alan Norton, head of intelligence at credit firm Graydon.

But Pat Weekes, managing director of distributor NV3, disagreed. "Some traditional voice resellers are struggling, but the market is still moving. It's just not as buoyant as usual."