& cplSiteName &

Colt Reports Q1, Restructuring Plans

Light Reading
News Wire Feed
Light Reading
4/22/2014
50%
50%

LONDON -- Colt Group S.A. (London Stock Exchange: COLT) today issued its Interim Management Statement for the three months ended 31 March 2014.

Group revenue for the quarter amounted to €399.8 million (Q1 ‘13: €392.1 million). This reflects year on year revenue growth of 2.0% (Q1 ‘13: declined 1.3%). On a constant currency basis Group revenue grew 1.2% (Q1 ’13: declined 0.7%) with contributions from all four lines of business:

  • Network Services revenue grew 0.4% (Q1 ’13: 1.9%). Managed networking revenues grew 9.8%, while bandwidth services and other revenues declined by 6.5%. Legacy (SDH low speed connections) revenues accounted for the majority of the decline at €5.5m.
  • Voice Services revenue grew 0.8% (Q1 ’13: declined 4.6%). Enterprise voice declined by 11.4% (Q1 ’13: 12.0%) driven by regulatory driven price declines and contraction of certain lower margin customer accounts. Growth in Carrier voice offset the decline in Enterprise voice albeit at low margins. The impact of regulatory driven price changes amounted to €6.1m negative impact in the quarter compared with €10.8m in Q1 ’13.
  • Data Centre Services revenue (excluding modular product sales) grew 8.1% (Q1 ’13: declined 3.4%). Growth in colocation revenue was offset by the timing of sales of our modular ftec halls which are not recurring in nature. As a result, total data centre revenue grew 0.5% (Q1 ’13: declined 1.0%).
  • IT Services revenue grew 15.0% (Q1 ’13: 4.3%) largely due to increased levels of equipment sales.

    Group EBITDA of €74.1 million (Q1 ‘13: €80.5 million) represented a year on year decline of €6.4 million (8.0%). The decline in EBITDA resulted from margin compression due to product mix changes, the continued churn and pricing pressures in our bandwidth products and the flow through of previous year rate declines to our Enterprise voice customers. In bandwidth products, highly profitable legacy products are being replaced with lower margin managed networking services. In voice products, the impact of termination rate declines have affected both overall revenue and margin on enterprise and wholesale business. We would expect this pressure on margins to continue through the year.

    Net funds as at 31 March 2014 amounted to €157.0 million (31 December 2013: €195.6 million). The cash outflow of €38.6 million for the quarter (Q1 ’13: outflow of €54.2m) reflected normal seasonal outflows, including annual prepayments and staff incentives. Capital expenditure for the first quarter of 2014 decreased to €74.5 million (Q1 ‘13: €81.2 million).

    Colt is currently completing a strategic review of its performance by lines of business with a focus on operational and financial improvement. We are moving forward with the reorganisation of our business into four lines of business as previously announced: network services, IT services, data centre services and voice services. These new business units will be supported by our existing go to market and shared service organisations. Business plans for each of these units have been formalised and organisational change is in process. The underlying plans are aimed to facilitate the prioritisation of investments and opportunities that are of the greatest strategic and commercial value to our Group with a goal to improve revenue growth, margin and cash flow in 2015 and beyond.

    As part of this process, we are announcing today a planned reduction in our Carrier voice business. We will withdraw from approximately 85% of our Carrier voice trading contracts over the next few months. Our objective is to liberate approximately five billion minutes per annum of voice network capacity to pursue more profitable enterprise voice business. This decision will result in the loss of approximately €175m of annualised revenue (total 2013 Carrier voice revenue was €250.4m), with roughly half the reduction evident in FY 2014. We expect that the rationalisation of the voice trading operations will improve Group profit margins over the next few years and have an immaterial impact on absolute EBITDA in 2014.

    We expect that execution of all of the business plans will result in certain workforce restructuring actions during the second half of 2014 as the Company aligns its cost structure to improve profitability. Payback on the restructuring will typically be in the range of 9 to 12 months and for the most part occur in 2015.

    Outlook
    As a result of margin compression due to product mix changes, the continued churn and pricing pressures in our bandwidth products and the flow through of previous year rate declines to our Enterprise voice customers, we expect 2014 EBITDA (before restructuring charges) to range c.5% to 10% below current consensus estimates of €325m. In addition we expect to incur restructuring charges in the second half of 2014 of approximately €30m relating to the execution of the plans laid out above.

    Rakesh Bhasin, Chief Executive Officer, said: “We are moving forward with our reorganisation into four lines of business. I believe this structure will provide the focus we need to address challenges in the marketplace. It will also allow us to prioritise investments that are of greatest strategic and commercial value to our Group. I am confident that these changes will help us grow the business and improve profit margins in future years.”

    Colt Technology Services Group Ltd (London: COLT)

    (0)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
    From The Founder
    Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
    Flash Poll
    Live Streaming Video
    Charting the CSP's Future
    Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
    LRTV Custom TV
    Huawei's Pre-MWC Analyst Briefing 2017 Highlights

    2|22|17   |     |   (0) comments


    Huawei shares its vision for this year's MWC.
    LRTV Interviews
    MWC17: 5G, Cloud RAN & More

    2|21|17   |   04:35   |   (0) comments


    Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
    LRTV Interviews
    MWC 2017's Key 2-Letter Terms

    2|20|17   |   08:29   |   (1) comment


    5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
    LRTV Interviews
    Key Trends for Mobile Operators in Developing Markets

    2|20|17   |   06:37   |   (0) comments


    Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
    LRTV Documentaries
    YouTube Takes on Facebook Live-Streaming

    2|17|17   |     |   (0) comments


    Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
    LRTV Custom TV
    Open Source NFV/SDN Automation

    2|17|17   |   05:54   |   (0) comments


    AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
    LRTV Documentaries
    Uber & NASA Collaborate on Flying Car Project

    2|16|17   |     |   (0) comments


    Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
    LRTV Documentaries
    Zuckerberg Tries Out the Oculus Rift VR Glove

    2|15|17   |     |   (0) comments


    Facebook CEO shows off a new way to interact with the Oculus Rift virtual reality headset: an Oculus glove.
    LRTV Custom TV
    Huawei Digital Transformation Forum 2017

    2|10|17   |     |   (0) comments


    Here's a preview of the upcoming Huawei Digital Transformation Forum taking place in Barcelona with trending telecom topics like cloud, IoT, 5G and much more!
    Telecom Innovators Video Showcase
    Dan Sahar of Qwilt on Open Edge Cloud Platform

    2|8|17   |   08:38   |   (0) comments


    Dan Sahar, Qwilt's co-founder, sits down with Steve Saunders of Light Reading for a conversation about Qwilt's Open Edge Cloud platform and the new role of service providers in application and content delivery.
    LRTV Documentaries
    ZeroStack's 'Self-Driving Cloud'

    2|7|17   |   01:09   |   (0) comments


    Its Z-Brain tech automates day-to-day management and long-term planning for hybrid clouds.
    Telecom Innovators Video Showcase
    Nominum's Craig Sprosts on DNS & Cybersecurity Trends

    2|7|17   |     |   (0) comments


    Nominum's Craig Sprosts talks about the fast-changing landscape of cybersecurity with Steve Saunders of Light Reading. Sprosts touches on the trend of the rise of ransomwares, rivals of IoT base attacks, and mobile network security. He also discusses the realization of the importance of IoT security after a recent cyber attack that paralyzed several major ...
    Upcoming Live Events
    March 21-22, 2017, The Curtis Hotel, Denver, CO
    March 22, 2017, The Curtis Hotel, Denver, CO
    March 22, 2017, The Curtis Hotel, Denver, CO
    May 15-17, 2017, Austin Convention Center, Austin, TX
    May 15, 2017, Austin Convention Center - Austin, TX
    June 6, 2017, The Joule Hotel, Dallas, TX
    All Upcoming Live Events
    Infographics
    With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
    Hot Topics
    Is the Time Right for a Cisco/Ericsson Wedding?
    Ray Le Maistre, Editor-in-chief, 2/17/2017
    Broadband Has a Problem on the Pole
    Mari Silbey, Senior Editor, Cable/Video, 2/21/2017
    Verizon to Start Fixed 5G Customer Trials in April
    Dan Jones, Mobile Editor, 2/22/2017
    Nice to See at Least One CSP Taking My Advice
    Mitch Wagner, Editor, Enterprise Cloud, 2/17/2017
    Charter Launches 5G Field Trials
    Mari Silbey, Senior Editor, Cable/Video, 2/16/2017
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
    Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
    Animals with Phones
    No One Likes This Click Here
    Take a hint!
    Live Digital Audio

    Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.