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Latin acquisitions fuel BT's services growth

01 February 2008

BT insists it is more than a telecoms company. Boosted by acquisitions in strategic markets, Global Services is aiming to contribute half group income. Claire Rigby interviews Luis Álvarez Satorre, the executive in charge of operations across Europe, the Middle East, Africa and Latin America

Read more: BT Comsat INS i2i AT&T Concert Telmex Telefónica Argentina

Luis Álvarez Satorre: aiming for Global Services to contribute half of group revenues

Part of BT's increasingly international business empire, BT Global Services has been gathering speed lately with a string of strategic acquisitions.
These range from Indian company i2i and the Belgian consultancy INS on the IT and logistics side, to more network-based concerns such as the US companies Infonet, bought in 2005, and Comsat, acquired in a well-publicised purchase in 2007.
Its choice of acquisitions says much about the course the division — and hence BT itself — is taking, not only in terms of its internationalist ambitions but also in its diversification out of pure telecoms into a hybrid telecoms-IT-process-management direction.
And with it, BT Global Services is sprinting forward to become one of the company's most lucrative sections.
The unit serves corporate, multinational and government clients across the globe, including in the UK. Its DNA includes former parts of the multinational-serving Concert, a long-defunct joint venture with AT&T.
In 2004, of BT's overall £18.5 billion revenue just £205 million came from outside Europe. By the end of March 2007, a third of that financial year's £20.2 billion came from the company's extra-European operations. BT expects that Global Services, now present in 170 countries, will soon contribute fully half its revenues.
It's no surprise to find, then, that since its official launch in Latin America less than two years ago, BT Global Services has made large strides in the region's market. It has become the third largest player in the corporate market — behind Telmex and Telefónica — with remarkable speed, mainly as the result of acquisitions, not least that of Comsat, which came complete with a 15-country network.
This growth has taken place under the leadership of Luis Álvarez Satorre, who was placed in charge of BT's Spanish operations in January 2001.
The company's Iberian income more than quadrupled on Álvarez's watch, from €93 million in 2000 to €419 million in 2005-06.
It's presumably not exclusively a result of his magic touch, but he's certainly doing something right, since his progress inside BT has been impressive. Álvarez's remit expanded to include Latin America in the run-up to BT's launch there in Mexico in January 2006; and in May 2007, as part of the company's internal reorganisation, he became president of BT Europe, Middle East, Africa and Latin America.

Comsat acquisition

He spoke to Global Telecoms Business in a week in which he had just returned from a trip to Argentina, Brazil and Mexico to inspect BT's latest prize acquisition, Comsat — more of which later — and we started by asking him how the company had evolved since he first came on board in 1999.
"Since Ben Verwaayen [CEO of BT] came in 2001, there's been a very consistent roll-out in terms of strategy," he says, "and I think that's incredibly important, because in this business, if you lose consistency then you're at risk. Having a clear strategy and having been able to implement it has been very, very powerful.
"But I think the major change I've seen in my time at BT has been its putting the customer in the centre and recognizing that our best consultants are our customers. It's something that many companies talk about, but I've been able to see for myself that here it has actually happened."
In BT's case this does appear to be more than just client-pleasing rhetoric, since the Global Services business model is based to a large extent on the development of its infrastructure according to the expanding needs of its international client base.
"Rather than building an infrastructure and then trying to find out which customers are interested, we're building the company for our customers — creating, building and even acquiring new assets based on where our customers are investing, and where they have business requirements."
And with some of the world's largest multinationals busy making the most of the opportunities for growth in Latin America, BT's network has been growing in tandem, creating a solid, expansive network able to collapse long distances for its clients, and leaving them free to concentrate on their core businesses.
"It has been a very organic process for us," says Álvarez, "of winning these large contracts with the expansion of Unilever, Pepsico and InBev in the region, while at the same time integrating the capabilities of Infonet and acquiring Telexis from Fiat in Brazil, in 2006," he says.
"And now with the acquisition of Comsat, we have been able to really leap forward in Latin America."
What in particular did Comsat have that BT wanted? "There were a number of things, beginning with the customer base. It was totally aligned with our target customer base — enterprise and corporate businesses, and governments — so it was perfect."
Comsat came with a set of some 2,000 corporate and public-sector clients, as well as a staff of 700, ramping up BT's manpower in the region from just 100 previously.
"Then there was Comsat's IT infrastructure," Álvarez continues, "which has multiplied our capability in the region by a factor of ten", boosting the scope of BT's '21st-century network' in the area from 17 nodes to 180 in one move.
"Also Comsat's data centres in Argentina, Brazil and Colombia, which we didn't have before and which, since our business is networked IT services, are absolutely critical for us."
Finally, there's Comsat's access: with some 20,000 connections in the region through its VSAT satellite link, "it has increased our capability to connect customers very quickly", he says.
"Satellite is a very powerful tool in places like Latin America," says Álvarez, "because it provides you, on the one hand, with the facility to go to the market very quickly. You don't need to wait until the infrastructure is ready. And it's also very useful for interim installations in remote places like Manaus, Brazil, or in Mendoza in Argentina, where the infrastructure is lacking."
Comsat's satellite deals include that of the Caixa Econômica Federal in Brazil — a state-owned bank that also runs the national lottery — and Compartel in Colombia, a project that was recently expanded from providing more than 3,000 internet access points across the country to include provision to 313 public schools, as well as providing telephony to rural areas.

Satellite broadband

Communications provision to rural areas is also the foundation of Comsat's Gesac contract in Brazil, extended in October to run for a further 12 months, which uses VSAT to bring broadband and VoIP to the furthest-flung regions of the country, including to military garrisons, poor communities and indigenous villages.
"It's a question," says Álvarez, "of making the best use of the available infrastructure and of the appropriate technology in each context."
The company is just as pragmatic in its approach to WiMax: "It's a tactical matter," says Álvarez. "There isn't much point in building a WiMax network in a city where everything is already cabled. But in some remote places, then it may be the best way to provide broadband services."
He also points out that you can provide WiMax services on some frequencies without a licence; which makes WiMax very useful as well as particularly efficient in remote locations. And tactically linking satellite to WiMax to wifi, the possibilities multiply even further. BT is offering fixed-mobile convergence to its corporate customers using wifi, rather than cellular technology.
"Wifi is becoming more and more easily available," Álvarez explains, "and its bandwidth is much higher than that of GSM or even GPRS or 3G. It's very easy for us to expand the integrated capabilities we have globally to provide services to our customers — we have 49,000 wifi hotspots around the world, so if those hotspots become available for telephony, then that is going to dramatically change the way our customers make their calls."
But much as telecoms infrastructure is, quite naturally, one of BT's core specialities, it's where the network meets the IT that the company is, more and more, coming into its own: "Before, you had IT companies and telecoms companies, but no one was in this space that we call the 'convergence space'," Álvarez enthuses.
"We've been able to create something that was non-existent before, and that's the capability to provide IT services linked to the network. For example, you build an IP network and then you realise that you need security — it's essential that you are able to protect your assets."
That might be via firewalls, he explains, but it's also through being able to control what happens on the network through identity-management and in-company email systems, secure hosting and backup recovery.
Álvarez is on familiar ground discussing these kinds of technologies: with seven years in Grupo Santander's IT section under his belt, as well as a previous track record at Ericsson and IBM, he is also credited with being one of the pioneers of internet banking in his native Spain — he was in charge of the team that launched Spain's first internet banking service during his time at Banesto.
"I think that having worked at Ericsson and IBM, and having then spent eleven years in banking, I was very quickly able to understand what our customer requirements are. And it's being focused on corporate business that has made this so much easier," says Álvarez. "If you look at the strategy of some of the other operators in the region it's more of a multi-domestic approach. Ours is different: it's a global approach."

Telemarketing campaigns

Another area in which BT is pulling hardware and software together to offer converged services is in the field of call centres, where BT has moved into process management — providing a set of services that ranges from designing telemarketing campaigns, making the calls, processing the data, and even managing the resultant contracts.
It sounds like BT is willing to go as far as its clients need it to go in terms of services. "We're interested in facilitating whatever our customers need to do," says Álvarez, "which in some of these cases means finding key partners. We are an enabler — our capabilities are in providing the platform from which our customers can manage new business."
That willingness to work with other operators has meant that even with the companies that might be its rivals in one sense, it has managed to cultivate cooperative relationships: "We are not competing face to face with Telefónica and Telmex," he says. "We are partnering with them, using their infrastructure to supply services to our customers, especially in the case of Telmex."
A business partnership, indeed, is what first led BT to Comsat's door, when the two companies worked together on a number of contracts in the region. "It was a good chance to assess the company," says Álvarez. "We were able to test Comsat's capabilities in deploying services and being able manage infrastructure."
BT is famously keen on implementing new styles of working among its staff — a process it manages through its Workstyle programme: a framework to manage job-sharing, home working and flexitime in a set of configurations both procedural and technical, based on innovations in both HR and IT.
And speaking to Global Telecoms Business in a little time taken out from his family holiday in southern Spain, Álvarez clearly practises what he preaches — as do members of his team we spoke to, who just as they are perfectly prepared to work from their holidays, also enjoy the liberty to be able to work from home when possible, or to take a day off when necessary.
It's just as well there is a little slack built in. As president of BT Europe, Middle East, Africa and Latin America — the kind of title any player of Risk would kill for — how on earth does Álvarez manage to keep such a globe-spanning remit under control?
"Well, one of the first things I've been doing is to try and sort out what the priorities are," he says.
"There are so many things going on, as you can imagine, that you could be absorbed every single minute of every day, and get distracted into not paying enough attention to the critical things. And then after that it's about making sure I have the right team on board."
He's passionate about delegating, he says: "I'm sure, when I have something that needs to be done, that my people will want the opportunity to take it on. One of the best things about BT is its people — I really do think it has one of the best teams in the industry by far, and that makes it very easy, for someone with the will to make things happen and the ambition to make things evolve, to accomplish all those things." GTB