Four years ago saw Infracapital purchase a 50% stake in Neos Networks. The partnership has allowed them to invest significantly in metro access, the unbundling of exchanges and expansion of data centres. New CFO, Craig Forrester believes the business now needs to focus on commercialising the investment and accelerating the returns.
“It’s taken a fair amount of time and cost to put us in the place we are now. The investment has allowed us significant reach and a competitive position in the market. Now it's about working through to support the business and maximise the return on the investment made.”
Forrester has spent 15 years working in the telco space, initially joining BT to manage their global networks. He also spent five years at Colt supporting the CCO and working closely with the commercial team.
Forrester joined Neos Networks in autumn of last year, and having worked with the company previously from a purchasing perspective, he had a good idea of what the business was about. But complacency wasn’t an option.
“When you join a business, you should never assume that you know everything about it. I'm really focusing on understanding the hydraulics of the business - what are the key cost and revenue drivers? Within a telco you tend to have price erosion for your customers. You'll have soft ceasing and hard ceasing. Soft is when the price goes down, and hard is when you lose the customer. From a supplier perspective, you get some offset on that. So, for me it’s about looking into the detail the business. What the focus is from a product perspective, as well a customer perspective.
“When I joined I was really interested in looking at the expansion over the last few years. I wanted to say ‘So the business has put a lot of money into this, what's the driver of that? How do we leverage that further?’ Now it's a case of okay, it's clear what we are and what we do - is it clear enough to the market? I think we can do a little more there. Have we fully commercialised all those assets to the maximum level that we can? No, I think we can still do more.”
Forrester joined a new CEO at the company (Lee Myall joined the business last year) and says their joint focus will be on growth within the business and increasing sustainable recurring revenue.
“The business has sustained a good level of growth for a period of time, it has been invested in significantly. Now it’s about the next steps, looking at the services we provide on the network that we've built and driving top line growth, but more importantly margin and bottom line growth.”
“We've got a very good set of shareholders who have invested and continue to invest well into the business and that makes a big difference. We've got a really solid set of assets. Investment wise now it’s more about how the business operates rather than externally. Having done a lot of Metro access type investment into some of the larger cities, I think now is it's really about trying to leverage that, rather than continue to grow the asset base.”
After 15 years in the industry, Forrester has witnessed a lot of change. He points out that the market tends to operate in cycles and has noted a rise in competition between key players in the UK market. He believes Neos Networks' point of difference is their heritage of critical national infrastructure (CNI).
“What we do for some of our customers has considerable value, whereas a lot of what we do as telcos can be relatively commoditised.
"I think the big challenge for us is to make the most of that CNI heritage and the value within that, rather than always competing on a more commoditised level. We will continue to compete on commodity items, there is good margins and there's good sales within that. But if we look at some of the key customers, they're much more about resilience, quality of service, and for that you get more of a premium – it’s a two way
thing and you have to look after it. Offering added value type services within a clear infrastructure whilst not really looking to sell lots of over the top service and instead being very, very good at what we do is critical.”
