TelcoDR announces a billion dollar fund for cloud telco

Skyvera formed as TelcoDR telco cloud software vehicle. The billion dollar backer is a mystery but the model looks familiar.

TelcoDR, the company that says it is on a mission to drive the transformation of telco software workloads to the public cloud, has launched a new entity to further drive its investment in the space.

Following the launch of BSS company Totogi, it has now formed a company called Skyvera. Skyvera, backed by an available acquisition fund of $1 billion, will buy software assets in the telco space and make them available for use in the public cloud. As such, Skyvera will develop “a continually growing library of telco enterprise software solutions”.

Skyvera is formed as a subsidiary of TelcoDR, and will be led by Matt Taylor, who has a background with BSS company Matrixx Software. Its first act has been to acquire Zephyrtel, itself formed in 2018 to drive the adoption of cloud-native telco software, and owned by PE company ESW Capital. Zephyrtel’s website now defaults to Skyvera.

Although the TelcoDR press release didn’t divulge the name of the billion dollar backer of the “Telco Transformation Fund” that sits behind this latest move, the name Skyvera does have a previous life within the ESW Capital universe. Skyvera was the name of a collaboration software company acquired in 2019 by Aurea, an enterprise software company owned by ESW. Later that year, Aurea then took the Skyvera software assets and put them under the umbrella of IgniteTech, mothballing the Skyvera name. It’s possible, then, that Skyvera was a brand that was on the ESW shelf and ready to be re-purposed as TelcoDR’s vehicle for ownership of telco software assets.

IgniteTech, by the way, offers a portfolio of enterprise software. Its model is to take software assets it sees as under-funded or under-resourced, re-tool them for deployment on AWS, and then offer them with “Netflix-style” licensing models. It describes its portfolio as a Software Library, a term directly echoed by TelcoDR’s Skyvera release.

As reported, TelcoDR’s and Skyvera’s first act has been to manoeuvre Zephyrtel into the Skyvera platform. Zephyrtel was an ESW-owned company that was launched in 2018 to attempt a similar ESW-style play in the telecoms software space. It bought up disparate companies, often ones that had real CSP revenues but that had reached a ceiling in terms of their market scale, and looked to re-tool their software to be “cloud-native”. At its launch it said it wanted to be a billion dollar company within five years, saying that its acquisitions already gave it ongoing revenues of $50 million. Its previous CEO Mike Sherwin said at the time of his departure in 2020 that revenues were now $70 million, but that he was leaving as the owner would be “consolidating assets into bigger company structures.”

That structure now appears to be Skyvera, under the auspices of TelcoDR.

Like many ESW companies, technical development at ZephyrTel was underpinned by access to Crossover. Crossover is a pool of home-worker developers that are then recruited in turn by company agents to work on specific projects for ESW companies. Sometimes developers on staff at an acquired company remain working via the Crossover platform. Usually they do not.

The use of Crossover to provide development capabilities was an issue of contention at Optiva, the listed telco BSS company that TelcoDR CEO Danielle Royston previously lead, and that was at one time controlled by ESW. Shareholders that were opposed to ESW’s control objected to the use of Crossover as the technology provider because they said it could represent a conflict of interest for ESW, with Optiva spending significant money on its Crossover asset. Another objection was that Crossover was simultaneously providing developer services to Zephyrtel, which was viewed as a  competitor to Optiva in some areas. In the end, ESW was levered out of its board position and Royston also left her role in a departure attributed to a pay dispute, emerging a short while afterwards with a growing war chest at TelcoDR. (After Royston left Optiva it began insourcing technical development under new CEO John Giere.)

So there is an established ESW pattern. Buy up software companies, often ones that are in some way under-resourced or hitting a ceiling on being able to scale, re-tool the development to Crossover, and then offer the software back as cloud-native and/or optimised for the public cloud. That could well be the template for Skyvera, although there has been no official confirmation that ESW, or its owner Joseph Liemandt, are TelcoDR’s ultimate backers.

If Skyvera does, however, follow the ESW model, then mobile operators should expect to see it aggressively buying companies that operate in the sector, reworking the code to public cloud functionality via Crossover, and making it re-available via its library. To encourage adoption of Skyvera-operated software, the company will offer telcos access to the “Skyvera Cloud Club” – essentially a loyalty programme that will offer telcos credits of equivalent value to their existing spend.