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Optical/IP

Rivals Fancy C&W's Castoffs

Cable and Wireless plc (NYSE: CWP)'s decision to dump 27,000 business customers might have left investors and analysts a bit cold, but it raised eyebrows and excitement levels at some of the U.K.'s other service providers. (See C&W Stuns With Job & Customer Cuts.)

Take Phil Male, chief operating officer at THUS plc (London: THUS), who didn't miss his chance to have a dig at a rival. "At THUS we value all our customers," says Male in an email to Light Reading, adding: "We welcome the new market opportunities that yesterday's announcement by C&W present as it provides us with an ideal opportunity to expand our customer base even further...

"Our focus on business customer growth remains integral to our strategy as we believe this is the best way to deliver value for our company. The acquisitions we have recently embarked upon support this strategy and will enable us to secure more business with more customers." (See THUS Gets Your Communications.)

Other players, such as Colt Technology Services Group Ltd , Global Crossing (Nasdaq: GLBC), and Verizon Enterprise Solutions (formerly MCI), declined to comment on C&W's disconnection strategy, but one industry veteran, who requested anonymity, said there would be a mass scramble among those with small and medium-sized business (SMB) strategies to identify and cherry-pick the most lucrative of C&W's leftovers. (See Viatel Lures SMBs to VOIP .)

And Camille Mendler, head of the European telecom analyst team at Yankee Group Research Inc. , reckons they'll pick up some decent business.

"When you look at the demographics of the U.K. business telecom service market, I can understand why C&W has made this decision," she says, "but in my view, it's the mid-sized business customers, the ones that C&W is letting go, that will deliver value to service providers in the long term." Mendler adds that it's the diversity that thousands of mid-sized business bring to a carrier's business customer base that provides the liquidity needed to develop and sustain the business, "and I'm not sure the rump C&W will be left with will be able to provide that liquidity."

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 4:04:14 AM
re: Rivals Fancy C&W's Castoffs There may well be some customers that don't make C&W's threshold that other carriers could make money from, especially if they already have Ethernet infrastructure in place in the main cities, but it's going to be a tough picking the ones with growth and margin potential from those that cost more than they spend.

And I can't help thinking some of these small customers would be be better off with a business DSL line than a leased line -- this disconnection will force them to reconsider their connectivity and voice plans and probably find a better deal.
American Indian 12/5/2012 | 4:04:14 AM
re: Rivals Fancy C&W's Castoffs C&W reality isw that their competition has not figured out -- financial buyers of telecom stock want profits not wild ass revenue growth with no contribution to profit.

C&W is not dumb. They are understanding the difference of satisfied customers that are only satisfied until the next low price comes along versus customer segments that are loyal and value reliability. The "price lovers" are expensive customers -- churn!

To me it is that simple. Competitors of C&W that believe this is a gift -- short their stocks.
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