Avaya and RingCentral have announced a major commercial tie-up that will see the two co-develop and market a unified communications-as-a-service solution.
There are two facets to the deal, starting with Avaya Cloud Office by RingCentral (ACO). RingCentral and Avaya will co-develop partner programs for the cloud solution that leverage Avaya’s global sales and partner network to build automated technologies to help customers transition to the new solution.
RingCentral said in a press release that the ACO will maximise the opportunity provided by Avaya’s global install base of on-premises UC seats and partner network that spans 180 countries. Avaya’s customers will be able to leverage their existing Avaya investments while reducing migration complexities when switching to ACO, the company said.
“This strategic partnership leverages the respective strengths of Avaya and RingCentral to provide a definitive differentiated solution,” said RingCentral CEO Vlad Shmunis.
“We are excited to bring RingCentral’s leading UCaaS platform to Avaya’s installed base of over 100 million users and over 4700 partners, providing long-term growth opportunities for both our companies.”
Avaya CEO Jim Chirico said this was an “unprecedented opportunity” to accelerate customer’s transition to the cloud.
“This also gives us the opportunity to unlock value from a largely unmonetised base of our business as it brings compelling value to our customers and partners. We believe this highly complementary partnership is a game changer that expands the total addressable market for Avaya and creates meaningful value for both Avaya and RingCentral.”
While both companies will contribute to development, sales and marketing, RingCentral will also pay Avaya a US$375 million advance, predominately for future commissions and licensing rights.
The other major facet is that RingCentral will invest US$125 million in preferred equity in Avaya, equating to a six percent of Avaya if the shares were converted. The board of directors for both companies have already approved the deal.
Reports of a US$5 billion merger between Avaya and rival Mitel have been swirling since at least April 2019, though a deal is yet to emerge.