This is purely from personal experience, but between 2 TSBs, I truly think they are maxed out. They have no human bandwidth left to place new orders, change orders, and follow up on anything outside of mainstream stuff.
Scansource filed that their TSB, Intelisys, grew 4% YoY.
When you consider that most renewals for network, which is more than two-thirds of orders, are at the same or a lower rate and new orders are at a slightly lower rate, then growth requires a significant amount of volume and scale to process that volume.
If you want to debate that network renewals are not a growth sector, look at ILEC wireline year over year. VZ Business, Lumen and AT&T have all taken huge write-downs in each sector.
Even on the voice side, migrations to SIP trunking is a reduction in revenue. Recently, the NYFD moved off Centrex. Verizon was the winner and the loser. That was a write down of revenue.
Two months ago, a client was hit with a $13K PRI bill. The move to SIP Trunking will reduce that by almost 98%. Imagine all the 30M-40M POTS lines and PRIs that bill for $100 per channel that will be replaced — that’s $3B in revenue that will likely become $600M. Commissions will also shrink proportionately.
So the TSBs have to crank out an enormous amount of orders – renewals, MAC/Ds, new – in order to grow. I think they have maxed out their bandwidth to do so. And growth is maxing out at 4% per year on a ARR rate.
I can see why the PE firms that have $675M invested in “super-agencies” and TSBs are wondering how to cash out.
If the loans I can see in EDGAR are for 13% interest, it isn’t sustainable.