Cox Business Plots Path to $2B in Revenues
NEW YORK -- The Future of Cable Business Services -- Cox Business Services broke $1 billion in annual revenues in 2010 and aims to pass the $2 billion mark by the end of 2016, at the same time making life tougher for its primary telco competitors, namely AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and CenturyLink Inc. (NYSE: CTL).
During his keynote presentation here this morning, Cox Business Services senior vice president Phil Meeks talked delegates through the operator's plans, noting that the MSO's commercial services unit is on track to bring in $1.4 billion in revenues during 2012. (See Cable's Cut of the Biz Services Pie to Eclipse $7B .)
And Cox's strategy to achieve its goals is not complex: The operator's business services team will work on and execute just a handful of specific objectives. "If you're focused on everything, you're focused on nothing," Meeks said.
For starters, Cox, which has almost 300,000 business customers, will continue to focus on its core market -- businesses with 19 or fewer employees -- and expand its wholesale business (including mobile backhaul), which generates about 10 percent of the unit's revenues.
Meeks says Cox's cellular backhaul business has already peaked and is showing signs of slowing down. However, he says the company sees some potential upside from the budding small cell market.
Another key area will be serving "large locals," which primarily include universities, government and healthcare customers. Meeks says this piece is important because Cox is not a national provider, so it makes a lot of sense to pursue deals with businesses that are densely concentrated in Cox's regional footprints.
As a final component, the plan calls for Cox to expand its market opportunity by a net 10 percent by 2016.
Cox is also thinking about how its business services unit will evolve and change beyond 2016.
"It's critical that we move down that continuum of redefining the business to make the opportunity bigger," he said, noting that Cox Business Services "will look a lot different in 2017 than we do now."
Meeks said Cox will pursue a mix of ways to achieve that, including M&A, partnerships and organic growth. He declined to speculate on what M&A opportunities Cox might consider. As a side note, the FCC recently loosened some rules that will make it easier for cable operators to acquire competitive local exchange carriers (CLECs). So that avenue may be open to Cox, if it decides to pursue it. (See Cable Cuts a Clearer Path to CLEC Buys.)
Cox's business services future will also include cloud-based applications for SMBs that don't have IT staff or dedicated IT budgets: That focus is shared by other major MSOs. (See Bright House Snaps Up Cloud Services Specialist and TW Cable Buys Into the Cloud.)
— Jeff Baumgartner, Site Editor, Light Reading Cable