Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
I did indeed leave a senior Digital role in BT and left via an enhanced redundancy offer, when BT was re-focusing on its network business. In fact, all of my peers did exactly the same thing driven by the dysfunction and toxicity in the organisation, leaving a big hole In BT's Digital capabilities. Realising its mistake, BT tried to rescind the offers, but couldn't. Financially, everyone's done very well, but their is still anger towards BT's leadership, as they should have made a good company great, but don't seem to know how.
BT has a few systemic problems. Firstly, its still an old-world networking company at its core, and has very limited digital capabilities outside of that space (although it likes to pretend otherwise), so can't increase its share of customers' spend. Secondly, the telco market has been increasingly commoditised for years now, decreasing revenue and margins. And lastly, its internal IT is pretty dysfunctional, massively reducing its agility in the market, and because it views itself as primarily a network provider, it has the wrong people in key roles to properly address this. I sold my holding a few years ago when the share price was £2 and on the way down!
This isn't rocket science. Value of Openreach assets is around £20bn, pension black hole of £10bn, management that lacks any insight into how to move up the value chain, and is encumbered by old, clunky IT = market cap of £10bn. No one should expect this share to significantly increase in value any time soon.
BT effectively dismantled its IT and services business to refocus on its core network business around 5 years ago, and paid a lot of skilled people to leave the business. Its IT skills are now internally facing and limited, with development mostly being off-shored to India, and managed fairly badly. It talks about 'Cloud', but has no cloud capabilities, with its own cloud compute offer failing badly through poor strategy and under-investment. EE management have generally been over-promoted within Company, but are effectively commodity sales people and are now driving commodity sales strategies based on mobile minutes and network bandwidth. There's no chance it will return to being a credible IR services provider.
I'm not getting your point I'm afraid Fleccy. Most businesses are now moving compute to cloud, and the main telco costs are in connecting to a local cloud PoP. Cloud providers have direct connect partners who can do this, and BT is one of many such providers. Its a competitive market and margins are tight. BT is hampered by its IT however which is slow and inflexible, which includes what it calls its 'Lead to Cash' processes. For example, I know of one major organisation with a network framework agreement with BT which introduced a time limit of two weeks on quote provision as BT was taking excessively long to provide pricing. BT is now no longer able to sell into a major customer for which on paper it should be the preferred provider.
Hi Fleccy. What you say is essentially correct. The market does require 'last mile' services from exchanges to customer premises, which is where the likes of Openreach provide essential services. In the retail market, BT will continue to be a significant player. This isn't true in the business market however where for example 10Gb access costs have reduced dramatically over the last few years, with BT being out-competed by smaller, leaner opposition, often using Openreach infrastructure at commodity prices. Cloud is also a major threat to BT (their exec team only realised this quite recently), as this demotes BT to being a provider of commodity access to Internet peering points to which Cloud providers have direct, high bandwidth access. Once consumers are connected to Cloud, the providers have their own, highly integrated software defined networks which offer the wide area connectivity and related services which used to be highly lucrative for BT.
The issue that stops BT being able to grow is its IT infrastructure. Its broken and fragmented, and effectively stops BT from being able to flexibly respond to the market. Modern cloud providers can provide WAN connections between continents in around one minute. The BT sales and provisioning processes literally takes at least 2 months. Key people like Howard Watson seem singularly unable to address this issue. BT's future is as a commodity broadband and mobile provider, a market where revenue and margins are shrinking.