GCI steers into international waters with acquisition of £13m Microsoft partner

Purchase of Modality Systems sees comms provider now play in US, Australia and Asia

GCI has snapped up Microsoft specialist Modality Systems in order to go global, according to CTO Mike Constantine.

This is the first acquisition by the comms provider since private equity firm Mayfair became a majority stakeholder in it last year, giving GCI a £60m war chest for M&A activity.

The purchase also marks GCI's first international expansion, as Modality has offices in the US, Australia and Asia, along with its headquarters in St Albans.

"Modality is one of the largest MS communications and collaboration players," Constantine told CRN.

"It essentially services businesses' needs when it comes to Microsoft collaborative technology, and it's a nice fit for us from a tech perspective as we are a specialist provider of MS services, though predominantly in the UK."

Modality has an in-house software development capability which complements management services, as well as making it easier to use the Microsoft communications platform, Constantine added.

Modality reported turnover of £12.5m in its last published financial year, which ended 31 December 2017, according to Companies House.

Its customer base is primarily "higher-end enterprise" and its purchase will now allow GCI to access global customers more easily, reported Constantine.

"They have some of the world's largest companies on their books," he claimed.

"That's a part of the global requirement; these larger organisations are generally global and require a global capability to deliver.

"We used to access that market via strategic partners, but this acquisition now gives us a direct route to those customers."

The CTO confirmed that Modality will keep its name and existing management team in place. It adds over 170 heads to GCI's employee base, which now stands at around 600, and Constantine said that inorganic growth is a big part of GCI's road map.

"We haven't stopped our inorganic journey, this is the start of it," he stated.

"This has opened up the ability to look at other types of acquisition now that we have international offices and hopefully you'll see more announcements like this in the near future.

"The scale of our business is in the UK and that is a market that we won't forget about. The international capability opens up new routes to market for the offerings we have, but if businesses are available on an international basis, it won't be something new for us as we'll have that capability in place already."

The comms provider has been seeing great traction in its Microsoft skills and services, Constantine added, and this bit of M&A played into its desire to grow that part of its portfolio.

"One of the key aspects of successfully deploying a Microsoft-based technology is making sure the pre-work that you do with the customer ahead of the actual technical implementation is done because that ensures that the adoption [is a] success," he said.

"We see that...being a strong part of our portfolio and Modality successfully does it for larger organisations."