Azzurri hopes debt trim will boost customer confidence

Comms VAR wipes £78m off interest-bearing debt and pledges to invest £3m in cloud infrastructure

Azzurri has convinced its backers to wipe more than three-quarters off its debt mountain in a move it hopes will erase any concerns potential customers have over its finances.

The comms VAR, which was taken over by a syndicate of banks in late 2011, has completed a refinancing process that has slashed its interest-bearing debt from £103m to £25m.

At the same time, the Avaya, Cisco and Mitel partner has convinced the banks to open the purse strings for a £3m investment in new cloud-based telecoms services over three years.

Talking to CRN, Azzurri chief executive Vim Vithaldas admitted Azzurri's lofty debt levels may have alienated potential clients in the past.

"We service 25 of the FTSE 100 in some shape or form so we have a very good client portfolio. I'm just hoping after this we can enhance that further," he said.

The new financing agreement, which runs to December 2016, was oiled by the fact its shareholders and debtholders are one and the same, Vithaldas said.

"It made the conversation easier: ‘you own us; we owe you so much money; can you reduce it to make our life easier?'," he illustrated.

"My wish list was I wanted normalised debt levels compared with our competitors and funding to develop our proposition for the next three years. This is a real vote of confidence from the shareholders that they have given me 100 per cent of my wish list."

Vithaldas estimated that Azzurri had coughed up just £500,000 or less on investments in new infrastructure over the past five years. The new £3m warchest has been earmarked for building cloud-based UC services over the next three years, beginning with a hosted multi-tenancy telephony solution next year.

Vithaldas (pictured), who took the reins nearly two years ago, conceded Azzurri had been hamstrung by its focus on Capex-based unified communications (UC).

"We are delighted with this investment, as in the current macro-economic climate, people can't write that £1m cheque," he said. "This gives us another string to our bow and allows us to widen the conversation to Opex offerings."

Azzurri saw fiscal 2012 revenues fall three per cent to £126m and admitted fiscal 2013, which ended on 30 June, had been "challenging", partly due to the slowdown in capex spending on telephony gear.

"We are focusing on chasing profitable business and not revenue for revenue's sake, which it is fair to say Azzurri has a history of," he said. "This has had an impact on the top line, but the bottom line has remained fairly stable. Mobile, data and calls and lines have remained stable profit wise.

"The area where it has been tough is telephony, which requires the largest capital expenditure - but everyone is in the same boat."

Vithaldas said Azzurri will continue to focus more on cross-selling to existing clients than attracting new logos.

"We have five centres of excellence," he said. "If you look at my top 200 customers, they're taking between two and three centres of excellence and my objective is to increase that."