Cable&Wireless returns from the wilderness

A 150 year-old company with its roots in the communications networks of the British Empire, Cable&Wireless was once a ubiquitous presence in the UK telecommunications space.

But it has been decidedly less visible since bearing the brunt of the dot-com crash and botching an attempt to break into the North American market in the early part of this century.

Now though, after a three-year transformational period during which the company split into two divisions – Worldwide (enterprise) and CWI (traditional telecommunications services) – C&W is staging something of a comeback.

In March 2009, it posted a 16% increase in revenue to £3.65 billion, and in June announced it had secured a 15-year, £207 million contract to supply a dedicated network to the National Grid. That is just the kind of lucrative business C&W Worldwide intends to win more of, says CEO Jim Marsh.

When he arrived in 2005, he explains, 90% of the company’s margins came from just 4% of the customers.

 “Our plan was to reduce the number of customers from 30,000 to 5,000,” Marsh says. “The first 10,000 were customers who spent maybe £1,000 with us, which was really not appropriate for a business focused on enterprise customers.”

 Marsh acknowledges that the decision to withdraw from the US corporate market in 2002, after being soundly beaten by native carriers, had left “some confusion in the minds of our customers as to what our strategy was”.

“There’s just no point competing head-on in the US with AT&T or Verizon,” he explains. “But what we do have is a lot of connectivity from US-based companies to the rest of the world, and other companies reaching into the US.” C&W’s renewed focus, Marsh says, is on leveraging this “very significant” international cabling, of which “we have arguably more than anyone else. We are truly an international player, even though we don’t have a dense network in many other countries.”

The company’s extensive links across Asia and many former British colonies makes it well positioned to benefit from the significant demand from companies for offshoring to these locations, he argues. “We’re finding that customers are willing to offshore not just to India, but also to other places like the Philippines, Cambodia and Vietnam. Anything like that works well for us because we have so much capability over there,” he says.

 “We have a fabulous brand in these territories [from the days of] the British Empire, particularly in Asia.”

Within the UK, C&W is preparing to intensify competition with rival BT, especially since the acquisition of Scottish provider THUS in October 2008. That acquisition allows it to reduce its dependence on BT’s own wholesale networking services to reach customers, explains Marsh.

“And of course, it’s one competitor out of the market,” he adds. Marsh says that he is “not surprised” by BT’s recent dismal financial performance, which has been undermined mainly by the company’s IT services arm, BT Global Services.

He believes that BT is now learning the lesson that C&W was forced to accept in its own wilderness years: that customer focus is key. “It took us quite a long time to turn around perception of our service quality, and it took quite a long time to get everyone bought into what we’re trying to do,” he explains. “Fortunately, we are there now, while they are just starting.”  

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