Telecoms giant Verizon buys IT security player

15 May 2007

US telecoms giant Verizon has acquired data security vendor Cybertrust for an undisclosed sum. The acquisition will enable Verizon to target a managed security market projected to exceed US$6bn by 2011.

“Security is a top concern for corporate CIOs worldwide, and this transaction demonstrates Verizon Business’ focus on and commitment to providing world-class security solutions,” said John Killian, president of Verizon Business.

“As the world continues to move to IP, this combination creates an essential engine for protecting our customers’ operations end to end,” Killian said.

As well as enhancing Verizon’s security services, the acquisition of Cybertrust arms the telecoms firm with a proven identity management technology as well as security operations centres in Europe and Asia to enable a “follow the sun” approach to global data security.

According to industry analyst firm Frost & Sulivan, the managed security services market is growing exponentially and is projected to exceed US$6bn by 2011.

“The security market has seen its share of mergers,” said Counse Broders, senior research director at Current Analysis. “This combination, though, will be very beneficial to Verizon Business, Cybertrust, and customers of both, and thrusts Verizon Business squarely onto the global security stage in a positive way. In short, it’s a competitive coup.”

Following regulatory approval, the acquisition is due to close in the next 60 to 90 days.

“This announcement is important for two reasons,” explained Jan Dawson, vice-president of Ovum’s US practice. “First, Verizon Business (and other global providers) have lagged behind AT&T in the security space for some time.

“Verizon Business’ previous acquisition in this space, the purchase of NetSec for $105 million by the former MCI in January 2005, was significantly smaller. Cybertrust is several times larger (no doubt the purchase price is too), and this acquisition should catapult Verizon Business into a much stronger position on security.

“Second, Cybertrust has a well-balanced footprint globally, with a strong presence in Europe and Asia Pacific as well as North America, in contrast to NetSec’s domestic US focus,” said Dawson, adding that the integration of Cybertrust into Verizon’s existing network service business will be critical.

By John Kennedy