AT&T Solutions and Matrixx: Will 1 + 1 Equal 3?

Share this article:
Cincinnati Bell's agreement to acquire AT&T Solutions Customer Care, formerly known as AT&T American Transtech, thrusts its subsidiary Matrixx Marketing into the forefront of the teleservicing industry, particularly in the rapidly growing customer-care market.


The teleservices unit of Cincinnati Bell, Matrixx is an independent provider of outsourced customer care for clients Microsoft Network, DirecTV among others. Its recent move to purchase one of the leading providers of relationship management services for a reported $625 million in cash positions the company as a dominant player in the industry, according to J. B. Dollison of Crutchfield Capital.


With the AT&T acquisition, "Matrixx will possibly do as much as a billion dollars in sales, and certainly, in a consolidating industry like the teleservicing industry, they will be the player to contend with," Dollison said.


John T. LaMacchia, president and chief executive officer of Cincinnati Bell, sees the acquisition as a demonstration of the company's commitment to provide value added customer care services for clients and employees.


"AT&T Solutions Customer Care also enhances our capacity and capability to support the major outsourcing efforts of leading corporations who are focused on enhanced customer services and greater cost efficiency," LaMacchia said.


Matrixx will acquire AT&T's long term contracts with a net year guarantee of proceeds from those long term contracts. During the eight-year contract between the two companies, Matrixx will provide the customer service to AT&T formerly provided by AT&T Solutions Customer Care.


According to Dollison, Matrixx will likely continue to keep the clientele that they acquired through AT&T, becoming a preferred source for current and future spending by a number of the company's business units, and will likely be successful in driving down the costs associated with serving those clients.


"We even see that potentially this acquisition will prove to increase margins on the AT&T contracts that they are acquiring," said Dollison.


Roger Aguinaldo, vice president, Gruppo, Levey & Capell Inc., an investment banking consultant company, says the acquisition is a win for all parties.


"The gain for Matrixx is not only the access to AT&T customers that it will get from the purchase, but also the experience AT&T Solutions brings to the Matrixx table," Aguinaldo said. "For AT&T the sale means that it no longer has to deal with the headache of operating the labor and training intensive customer solutions program, which is not its core competency. The price [$625 million cash] is right on the mark."


The acquisition is likely to change Matrixx, perhaps considerably.


"With [the acquisition of ] AT&T Solutions, we are taking a different approach," said Tom Kirkpatrick, vice president marketing development for Matrixx Marketing. Deviating from history -- when Matrixx simply swallowed the smaller acquired organization completely into the Matrixx fold -- Matrixx will examine its strengths and that of AT&T Solutions and incorporate the results into a new Matrixx Marketing. "We want 1 plus 1 to equal 3," said Kirkpatrick.


Among the new benefits AT&T Solutions is bringing to Matrixx is technology and human resources.


"Adding the outstanding management team and dedicated employees of AT&T Solutions Customer Care to Matrixx creates a business with unparalleled strength, scale and customer commitment," said David Dougherty, President, Matrixx Marketing.


The acquisition will be financed initially by Cincinnati Bell with short-term debt. Cincinnati Bell expects the transaction to dilute its financial results for 1998, impacting less than 10 percent of their anticipated earnings. The agreement is subject to Justice Department clearance. Both companies are anticipating that the transaction will close in the first quarter of 1998.
Share this article:

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs:

More in Agency

Russ Klein Tapped to Head American Marketing Association

Russ Klein Tapped to Head American Marketing Association

The former Burger King and 7-Eleven CMO takes over as the organization looks to expand globally.

Publicis Launches New Digital Agency

Publicis Launches New Digital Agency

Roar, an amalgam of top digital talent from across Publicis Groupe, will be led by Zenith OptiMedia veteran Sean Reardon.

RAPP Names Orlov CEO

RAPP Names Orlov CEO

The Volkswagen marketing executive is a veteran of Wunderman and WPP.