CWC recently published yearend results showed improved performance over previous years. What has it been doing right? Here are seven takeaways.
Last week, Cable and Wireless Communications (CWC) published the results for the year ending 31 March 2013, in which the organisation summarised its operational and financial performance over the period 2012/2013. CWC operates in 20 countries worldwide, 15 of which are in the English-speaking Caribbean. It is the parent company for LIME and a major shareholder in the Bahamas Telecommunications Company (BTC) and Telecommunications Services of Trinidad and Tobago (TSTT).
In commenting on the group results Chief Executive, Tony Rice, noted that “2012/13 has been a milestone year” (Source: CWC). Key successes included:
- improved position with regard to equity-free cash flow and debt
- more efficient operating costs
- improved EBITDA – better than the previous year and projected results.
For those who have been following CWC’s (or specifically LIME’s) performance in recent years, they may recall that the company was experiencing significant financial losses in the Caribbean, especially in Jamaica. As recently as last year, there were relentless rumours that LIME was planning to pull out of Jamaica, which management vehemently refuted. What a difference a year makes!
With the steady improvement in CWC’s performance over the last two years or so, it might be instructive to consider lessons from the transformation that is still taking place, which could be applied to other businesses. Below are seven insights.
1. Keep your focus. Although CWC/LIME is in the telecoms business – offering a broad range of telecoms services to a variety of customers – it allowed itself to get mired in the “cut and thrust” of a competitive mobile/cellular market in many countries across the Caribbean. It directed its focus and resources to that market, almost exclusively, at the expense of many of others services it offered.
Although the mobile/cellular market is highly lucrative, and the resources directed at maintaining and growing market share might have been necessary, it resulted in considerable deterioration of the infrastructure used for other services. Hence other companies, such as Flow and Karib Cable, were able to establish a significant presence in the Internet market in a number of countries across the region. Now, LIME has begun to reinvest in its networks, and to strengthen its presence in other telecoms services.
2. Identify your core business. Based on traditional business practice, it was important for companies to have direct control over most operations and processes associated with the business. However, current practices often demand greater efficiencies and optimisation, which means that organisations must be clear about what their core business is, and thereafter, determine how best to play to their strengths.
A recent example of this is the joint venture between CWC Wholesale Solutions and Columbus Networks, ‘to provide expanded wholesale bandwidth capacity’ and another agreement between the two parties for Columbus Networks to ‘provide CWC Wholesale Solutions certain operation and monitoring services’ (Source: CWC). Although CWC itself has a comprehensive submarine cable network, Columbus Networks’ is newer and more extensive. In establishing this joint venture, CWC has essentially deferred expanding its own international capacity, which would have been its traditional posture, to a company that currently is better than it is in that space.
3. Re-engineer your strategy. A key point highlighted in CWC’s yearend review is the fact that the company is implementing a clear strategy, which has contributed to the successes that have been realised, and which the firm will continue to follow into the foreseeable future:
The Group is now focused on a single region with low penetration for data services and strong growth potential where we have scale and market leadership. This focus will create a more unified, effective and cost-efficient Group. It will enable us to transform how we operate our businesses as we create an organisation structure and operating model that addresses the demands of a data driven market and can be scaled for growth. (Source: CWC)
For businesses that are struggling, it is critical to revisit the corporate strategy and be prepared to revise it.
4. Realign your resources to implement the strategy. Once the strategy has been agreed, it ought to be properly supported. In case of CWC, it has identified the following four priorities that will guide its strategic thrust:
- changing/simplifying its operating model
- improving operating efficiency
- capitalising on data opportunity to become a data-led provider, and
- leading in full service provision (Source: CWC).
Occasionally, organisations want to hedge their bets and pursue a variety of options, but this may dilute overall efforts and not produce the desired results. Hence it is important, if the strategy has been rigorously conceived, that it be given the requisite support in order for success to be achieved.
5. Shed non-core functions. Although this point might be politically and socially unpalatable, it can be necessary, especially when a business is struggling and needs to be placed on a firmer financial footing. In focusing on a business’ core functions and streamlining its operations, considerable savings may be made by outsourcing certain activities, which although necessary, are not critical for the business to have direct control over.
Over the last few years, CWC subsidiaries in many Caribbean countries have been outsourcing some of its contact centre customer care functions. Most recently in Jamaica, LIME has outsourced external installation and maintenance services to Ericsson, resulting in over 300 employees being made redundant (Source: Go-Jamaica). In the 2013/2014 financial year, CWC plans realise USD 100 million cost reduction and improve the Caribbean EBITDA margin (Source: CWC).
6. Become a game-changer in the market. Although this point might not be fully evident across the Caribbean region, there are signs that LIME/CWC wants to be innovative, competitive, and be seen as the leading telecoms service provider, in keeping with its stated priorities. So far, we have seen the company:
go on the offensive and drop mobile/cellular rates in Jamaica, causing the rest of the market to readjust- drastically improve the Internet broadband packages it offers in Barbados, in order to get a head start on Flow, which has a smaller footprint that it plans to expand
- aggressively roll-out and streamline operations in the Bahamas, to build market share across a range of services, but more importantly, to be well-positioned for when the mobile/cellular market is open to competition.
To varying degrees, LIME in the Caribbean might be limited by its own infrastructure, for which there are signs it is focussed on improving, and by the regulatory environment, which might be hampering some initiatives the company might wish to implement. Nevertheless, and for consumers, it will make interesting times. To other businesses, the takeaway is to try to stand out against your competitors. Be innovative.
7. Serve your customers. This final point might be the most critical and a constant consideration when all other points are being implemented. A question that management must continually ask and be prepared to clearly answer is, ‘will initiative “X” help us to serve our customers better?’ Businesses must ensure that they understand and are serving the needs of their customers.
In the case of LIME, the “game-changing” tactics highlighted in point 6, do suggest that it is beginning to listen its customers. Based on the CWC group strategy and priorities, especially to be the leading data and full service provider, the company will have little choice but to continue listening to its customers and ensure that they are served well.
Image credits: AKARAKINGDOMS/FreeDigitalPhotos.net; Marketing Magazine; Wikipedia
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