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Enterprise communications platform and telecommunications company Avaya could file for chapter 11 bankruptcy protection by next month, and is also considering the sale of its call center solutions division to reduce its sizeable debt.
The sale of the call center division could generate US$4bn to pay off debts, according to the Wall Street Journal, citing sources close to the company. Reuters reported that Clayton, Dubilier & Rice LLC (CD&R) is leading the race to acquire the call center unit.
Contacted by BNamericas, Avaya declined to comment.
Avaya became a privately-held company in 2007 when it was acquired by Silver Lake and TPG Capital. The company provides services in 31 Latin American markets.
The Avaya verticals that stand out in Latin America are health, education, government, manufacturing and finance, as global VP and chief technologist Jean Turgeon told BNamericas in May.
The company has seen its debt rise as it moves from being a traditional hardware firm to a software and services group. By May, according to Turgeon, 80% of Avaya's Latin America and Canada sales already came from software and services.
In its fiscal Q3, Avaya reported US$882mn in global revenues, down 11% year-on-year, of which US$87mn came from the Americas International region (Canada and Latin America). The unit is headed by Galib Karim, pictured.
The challenging scenario for Avaya could be positive for its competitors in the region, which include Aspect Software, a US company focused on contact center and customer experience solutions with a significant presence in Latin America.
In an interview with BNamericas last week, Aspect's VP for Latin America, Laurent Delache, (pictured above) and the channel sales manager for Brazil, Helder Cavalcanti, referred to Avaya as one of Aspect's most direct competitors. The eventual sale of Avaya's call center unit, therefore, could take an important rival out of Aspect's way.
But Aspect Software itself went through some troubling times in the recent past. In March this year, dealing with high debt, the group also filed for Chapter 11 bankruptcy in the US, managing to emerge in late May.
The pre-arranged agreement approved by the courts resulted in the reduction of more than US$320mn of prepetition indebtedness, the incurrence of new secured financing and an injection of fresh convertible debt capital to facilitate growth, the company stated at the time.
According to Delache and Cavalcanti, operations in Latin America have been fairly good despite those woes and regardless of the regional macroeconomic context. Aspect has 100 employees in Latin American and offices in Brazil, Mexico and Colombia, serving the rest of the region through distributors.
The company expects double-digit growth in Latin American revenues this year, rising from last year. Aspect's annual global sales are around US$400mn.
ICT consultancy firm Frost & Sullivan said revenues for the Latin American contact center market fell by 6.5% to US$249mn in 2015. The consultancy predicted the sector would grow to nearly US$400mn over the next five years.
In a 2013 study, Frost & Sullivan said that the implementation of hosted and cloud solutions in Latin American contact centers would expand rapidly over the following five years.