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Tampa's Syniverse Well-Connected In Cell Phone Universe

Tribune photo by SCOTT ISKOWITZ

Tony Holcombe, CEO and President of Syniverse Technologies. Syniverse provides seamless wireless communications for subscribers around the world.

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By RICHARD MULLINS | The Tampa Tribune

Published: June 16, 2008

You may not know a Tampa company called Syniverse. But if you have a cell phone, you should give them a nod of thanks when your calls go through.

Working behind the scenes, it makes billions of phone calls around the world work smoothly and has found itself in one of the most lucrative crossroads in the wireless market.

"Whenever I see kids at the mall texting, it makes me happy," said Tony G. Holcombe, president and chief executive of Syniverse Holdings Inc.

Here's why.

Every time someone sends a text message, there's a good chance that a fraction of a penny goes to Syniverse. It's a stream of revenue that adds up quickly when hundreds of millions of people are involved.

Syniverse also runs a massive system that lets your cell phone roam from carrier to carrier, so if you're an Alltel customer in Portland or Portugal, it will still be able to call home to Tampa.

Messaging

The real jumpstart at Syniverse came this spring.

Managers met at the company's placid headquarters in Highwoods Preserve and added up a startling series of numbers. Revenue was jumpingwell beyond what the company had told Wall Street analysts to expect.

"We started to see these incredible numbers and found out, oh, my God, this is coming from new devices," Holcomb said. All those advertisements pushing smart phones for teenagers and other decidedly nonbusiness customers must be working, and those new customers were firing up their smart phones to surf the net and send multimedia messages.

Syniverse ultimately posted revenue of $115.6 million for the first quarter, up 37 percent compared to the year before, and profit was $15.4 million, up 101 percent.

Then Syniverse raised its forecast for full-year revenue 5 percent, to between $455 million and $465 million. Stock in the company jumped 27 percent that day to $21.09, the most in its history as a public company. It has since pulled back somewhat amid a broad stock market slump.

Much of the new profit came from a relatively new line of business – handling the text, picture and data messages between carriers. For instance, if an Alltel customer sends a short text message to a friend with a Verizon phone, the messages often goes through Syniverse.

That's a good line of work to be in lately.

Monthly messages between phones in the United States hit 48 billion as of December 2007, up from just 9.8 billion two years before. With more nonbusiness customers buying smart phones such as BlackBerries, more customers are making messaging and Web surfing a big part of their lives.

Syniverse doesn't disclose exact figures, but in some cases it can take up to a penny from each message sent through its networks.

"There's just been this explosion in data traffic, and an expectation from people that they'll be able to send and receive it wherever they are," Holcomb said.

The next round of growth should come from abroad, Holcomb said, as there are more than 600 cellular carriers worldwide that need some kind of services to make roaming and messaging happen. For that reason, Syniverse has started acquiring potential rivals abroad, including major parts of the British-based clearing and roaming company BSG Wireless.

Holcomb has also revamped the company's executive suite in the last two years, hiring or promoting 11 new vice presidents, including new people for technology, human resources, finance, mergers, communications product management and customer support.

Right now, Syniverse employs about 1,100 people worldwide, including about 650 administrative and technical systems jobs in the Tampa Bay area. That job level probably won't grow dramatically in Tampa, he said. But the company's average pay here probably ranges around $60,000 to $70,000 Holcomb said, meaning the company is providing relatively high-wage positions compared to other companies in Florida.

Risks

All the growth doesn't mean Syniverse has a free ride, however.

Several other major technology companies are working to expand into the market, including Mountain View, Calif.-based VeriSign Inc. and Luxembourg-based MACH, which are strong in messaging and roaming.

Both VeriSign and MACH have opened or expanded their offices in the Tampa Bay area and have hired former Syniverse executives, a not-so-subtle sign they intend to compete more with Syniverse.

"VeriSign provides almost all the same services as Syniverse, and we really match up well," said Pete Tracanna, a former Syniverse executive who is now director of wireless clearing and roaming at VeriSign.

And one of the biggest risks to Syniverse comes from its own customers merging.

For instance, Verizon Wireless last week announced a deal to acquire regional provider Alltel. On its face, that means a loss of work for Syniverse since the two companies would no longer need to handle roaming issues because customers on both networks would be within one merged corporation.

"We think the management has done a very good job," said John Bright, an analyst with Nashville-based investment company Avondale Partners. "But the biggest risk to Syniverse is consolidation in the wireless world, whomever it is. The larger the customer, the more impactful it will be."

Reporter Richard Mullins can be reached at (813) 259-7919 or rmullins@tampatrib.com.

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