The Future10 Apr 2010 06:53
I think that last writer is dreaming. The assumption that organic growth will magically be 20% is just naïve. Telco’s (and reseller telco's such as SPT in particular) have a natural annual attrition and unless they are constantly replenished with new business they shrink. SpiriTel does not have a strong new business function and this is why we have previosly seen contraction at SPT with fixed line revenues dropping. The situation with cross sell is even weaker. The cross sell activity is embryonic to say the least. Middle management are resigning like there is no tomorrow and this is really nothing more than a company that had gone shopping and crudely stuck the pieces together without any real effort to exploit the possible cross sell synergies. They have started to work on this now but the efforts are way too little and too slow.
If you want to see the future of SpiriTel Plc look at the recent history of AT Communications Plc (or many others Redstone etc etc) who adopted the same strategy. ATC went shopping in a big way, very quickly raising turnover to over £100m, winning awards and accolades along the way. Throughout this period the market cap trundled long the bottom of the graph at around £8m before finally going bust when they couldn’t generate their profits to service the debt.
My recommendation – going nowhere, SELL!