In the tech world, it can be difficult to get cheap valuations on M&A deals. But, with the tightening of the VC market and a lousy IPO space, things are opening up. Perhaps this is a reason AT&T Inc. (NYSE: T) announced it is purchasing Wayport, which is a major WiFi services company. The price tag: $275 million.
With the transaction, AT&T gets about 20,000 domestic hotspots (making the total more than 80,000). Some of the new accounts include the Wyndham and Four Seasons hotels, as well as McDonald's Corporation (NYSE: MCD).
Mobility is pervasive -- and customers expect to get Net access anytime, anywhere. So, the Wayport deal is a good move for AT&T to stay ahead of the curve. Last year, for example, about 300 million WiFi-enabled devices were shipped. And, by 2021, the figure is expected to reach one billion.
To get some insight on the deal, I had a chance to interview Craig Settles, who is the author of Fighting the Good Fight for Municipal Wireless. According to him:
"This acquisition should benefit business travelers by streamlining the billing process for those who use WiFi in different cities. If access to all of the Wayport hotspots becomes free for AT&T customers, as is the case with Wayport service at McDonald's stores, this will eliminate some of the accounting hassles of reimbursing travelers for a myriad of different hotspot services. This represents significant savings for organizations with lots of mobile executives and managers.
"There's another impact here. This move further popularizes WiFi as a preferred means of mobile communication versus cellular. WiFi is much faster than cellular connections, and will continue to be so. But using WiFi by mobile business workers is still frowned upon by many organizations. With the impression that AT&T's ownership equals improved network security, whether true or not, organizations should loosen up these restrictions."
Tom Taulli is the author of various books, including The Complete M&A Handbook
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