ASX-listed People Telecom announced today it has acquired the assets and customers of business-grade hosted IP provider, ValueNet.

The acquisition is part of a growing trend by Australian firms to use a converged and fully hosted solution for their voice, Internet data and inter-site VPN requirements.

The acquisition was completed yesterday and the terms of the purchase agreement were not disclosed.

People Telecom acquired the ValueNet assets from Lemarne Corporation Limited.

People Telecom CEO, John Stanton, said the ValueNet solution will allow the telco to offer customers a business grade alternative to traditional voice and data networks or IP PABX systems.

ValueNet is currently in use in more than 40 enterprises across Australia providing a range of services from voicemail, virtual receptionist, advanced conferencing, in-built security, firewall protection and disaster recovery.

"Customers can avoid the costs of owning their own PABX, and enjoy guaranteed Quality of Service (QoS) on their communications network, while also making significant savings on their overall communications costs," Stanton said.

The ValueNet solution operates on the Genband M6 platform and uses a Cisco-based core network, with redundant Points of Presence (PoPs) in Sydney and Melbourne.

Stanton said key members of the ValueNet technical and commercial team had joined People Telecom as part of the transaction.

He said the telco will maintain existing ValueNet distributors and partners while looking to further strengthen the distribution channel.

"The ValueNet solution has proven itself able to generate and maintain high customer satisfaction and low customer churn and is projected to also increase overall gross margins in People Telecom's business," Stanton said.

"Along with the existing fully-hosted solution, plans are also well advanced for additional services that the Genband platform can support.

"These include trunking solutions to provide a competitive alternative to the existing 'direct-connect' offerings in the Australian market, as well as virtual key-systems and IP-based 4-32 line solutions for small businesses."

Stanton said the acquired offering complements recent upgrades to its core network, including the inclusion of Redback Networks' Ethernet-based aggregation equipment in People Telecom PoPs and the upgrade of associated IBM server software.

As well as being a telco provider, People Telecom, through its peoplenet 4 Web-based customer portal, also offers on-line billing and service management solutions.

Hosted security offerings, such as the firewall protection service provided by ValueNet, is growing rapidly in Australia with Frost and Sullivan predicting the market will top $843.1 million by 2012.

This is supported by IDC which forecasts hosted services will grow at a compound annual growth rate of 36.3 per cent between 2006 and 2011.