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Merging services

01 December 2006

Jim Marsh came into Cable & Wireless as part of its takeover in 2005 of Energis. Since then he has been in charge of the company's service delivery as CEO for Europe, the US and Asia, focussing the strategy on larger multinationals and performing the difficult task of turning off small, unprofitable customers

Read more: telecoms outsourcing M&As Cable & Wireless Energis enterprise telecoms

 

Jim Marsh: the strategy we had at Energis is very simply the strategy we are pursuing in our business here









 

Cable & Wireless has reinvented itself several times over the past few years. It's moved into and out of businesses, and in 2005 it took over a rival, Energis - though as part of that deal many of Energis's top people, and its culture, have moved into C&W.

Today, the whole of C&W still has something of an identity problem. It's split into two businesses, says Jim Marsh, who runs one of them. Most people call his unit Cable & Wireless UK, and the other one is called Cable & Wireless International.

But things aren't what they seem, says Marsh: "See my business card." That describes his as CEO for Europe, the US and Asia. Not Cable & Wireless UK.

"The international business is where we are the national incumbent, and that is 30-plus geographies around the world, that largest part of which is the Caribbean." That's not his: Harris Jones is the CEO.

"The key international business, what most people call the international business, is actually a series of national businesses," says Marsh. "We run the telecoms industry for those countries."

The other business, which is international but most people call Cable & Wireless UK, "is everywhere else in the world", he says. "That's my bit. In reality my business covers Europe, US and Asia, predominantly. In that business I am the chief executive, which means I am responsible for our strategy and business plan, and I report to John Pluthero, who is the executive chairman of the same business."

Clear? Marsh's side of the company is focussed on delivering services to large multinational corporations "who want connectivity globally", he says.

How big a challenge was it to merge the operations of Energis and C&W? "It was not a merger, it was a straight acquisition" of Energis by C&W, he points out.

Until the day before, the two companies had directly competing account teams. "We interviewed all the account teams, both sides, and made a decision who we thought was best. We did it very quickly." A period of uncertainty was "almost the worst thing".





Touching customers



Marsh's unit now has 5,500 employees and "we've had probably about 400-500 leave", he says, "but in that time we've recruited about 450. We have exited a number of colleagues in the business but one of the things we are focussing on is that 50% of any cost saving we re-invest back in front-line colleagues - colleagues who touch customers all the time."

Those who have left "tend to be management senior colleagues - expensive people", he adds. "What we have replaced them with are more people who are service management, fault management, help desk people for customers. We've taken out layers of management. The business was significantly over-managed."

The way Marsh puts it, Cable & Wireless's strategy "was refreshed when Energis was acquired by Cable & Wireless". Good word, refreshed. He and Pluthero "became part of Cable & Wireless". The Energis brand vanished the night before: when everyone turned up to work on completion day their buildings bore the new - or old, that should be - name.

"Actually the strategy we had at Energis is very simply the strategy we are pursuing in our business here," says Marsh.

"We are focussed on major multinational corporations, delivering their full telecommunications needs. Those corporations will have a significant UK element in most cases - that's a significant part of our network reach - but we're very focussed on those large users of telecommunications services. We are providing them with full services - voice, data, contact centre services, in some cases their mobile contracts. The full piece."

Does he regret the disappearance of the old Energis? "No. No, because we are absolutely part of Cable & Wireless." That company has "fantastic international capability and reach, which of course we never had in Energis".

However, the team is bringing "a lot of the philosophy we had in Energis is the philosophy we're bringing to Cable & Wireless". But that team is now working with an international brand: "We're a very big, significant international player."





Goodbye Bulldog



Meanwhile the consumer side has vanished. Not the consumer side that was, a decade ago, Cable & Wireless Communications, a cable operator, but a later attempt to develop a broadband residential product. The company bought an operation called Bulldog and hired a former Fastweb CEO, Emanuele Angelidis, from Italy to run it, and then sold the customer base, but not the network, to Pipex.

"It's very easy to say we're focussed on major corporations. For me, strategy is not just about what you are going to do but also what you're not going to do. And of course the thing that was a surprise to us when we were acquired by Cable & Wireless is how many very, very small customers there were in Cable & Wireless: thousands and thousands of customers who spend less than £1,000 a year."

But the move brought some bad headlines, as the company said it was moving from 30,000 customers "to a number much closer to 3,000". That was right for the company, says Marsh, but it meant writing to the other 27,000 to tell them C&W was going to cease their service.

"We want to very focussed on the major enterprise space. We want to make sure we're delivering great service to those customers." The company recognises "it's very hard to do that while serving these thousands and thousands of smaller customers".

Many of those dated back to the Mercury days. It had been a business that, frankly, Cable & Wireless had neglected. "It's a different market. It's a different experience to what you provide to the very large customers. If you're spending in excess of £50 million a year with us it's a different experience."

C&W wanted to be focussed, "focussed on one or the other and do it really well, and not try and do both".

The company is "on plan with the customer exit programme", he adds. "A number of alternative providers have sought to work with us to provide a seamless transition." Some offered a commercial deal to take over the customer base, "but we haven't done that: we see our responsibility as helping them move to what's right for them". BT has picked up some of that 27,000, he says.

It's been "time-consuming and resource-hungry". And the Bulldog "was part of the same theme for us", he adds. "Our view was that we are not going to be a residential broadband provider. That's absolutely not the core of what we do."

But C&W can provide a managed network to a company that is in the consumer market - which is exactly what it does provide to Pipex for the Bulldog service.

What's the lowest you need to spend with C&W to me a customer? "That's always a tricky question to answer," says Marsh.

"Half a million pounds a year plus is enough to suggest it might be the kind of customer for us. We do have customers that spend a bit less than this, which is why the 3,000 is not a hard a fast number."

But there are smaller companies that are expanding "who we think we can help", says Marsh. "We do have a significant number of customers who spend £10 million plus a year as well."

C&W does a lot of business "with organisations based in Asia", he adds. "There are some banks in Asia, and we do a lot with a major financial services institution based in the US as well." He's unwilling to give names.





Asian connections



"Asia is important for us. We're investing in our network capability in Asia. Cable & Wireless is a very proud brand in Asia." Despite selling Hongkong Telecom several years ago the company keeps its connections in the region, he says.

"What is that presence? It's not about building in-country networks. More often than not it's about providing connectivity from one country to other countries in the continent and across continents, and working with partners in-country to provide in-country network services."

C&W is not competing with local carriers. "We're looking to work with them in a number of places," he says.

What sort of infrastructure does C&W have now? "We have connectivity to roughly 130 countries. The bit that's ours and owned by us is about 110 countries and the rest is with partners."

It is looking for network interconnect deals with carriers in a number of countries, he says. "For many of our customers India is very important, because they are moving more of their capability to India. We have good reach to India, but we're looking at how we may more explicitly partner in India. The licence arrangements in India have changed and we have to think whether to get our own licence or not."

The company has "just short of 300 people in India", says Marsh, mainly focussed on services there to multinational corporations, "whether that's providing a managed service, managing other carriers or providing the interface to the UK".

And C&W has moved its own Asian network management to Bangalore in India. "We used to manage it from Hong Kong."





Transforming operations



It had been in Hong Kong because C&W used to own the local incumbent. "There has been a whole range of those operational decisions that we have to make as part of the transformation."

The company is "right in the middle" of deciding on its links into China. "I keep coming back to our customers. If our customers are saying we need reach here, then we provide service."

Does C&W look for customers in those markets looking for network access into the West? "We do have sales teams in most of those geographies," he says. "There would have to be a significant proportion that is on-net for us that would make it the right kind of commercial deal."

So UK capability usually features, though that isn't an absolute rule. "We have some oil companies - I can't give you the names yet - that we've just won provisioning of all their global network services." Those deals cover Europe, Africa and other areas, he says.

Ultimately, though, it's clear - though Marsh did not say so - that the two units of C&W do not make a natural partnership. The old C&W has been running incumbent operations in small countries across the world for a century, from Jamaica to Monaco, and it is a very different business from the new C&W that owes a lot to Energis.

In this renewed era of consolidation, it will be interesting to see where both parts go. GTB




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