SpiriTel’s ‘buy and build’ plan

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“To begin with, I worried day in and day out,” says SpiriTel chief executive Alastair Mills. “But the best advice I ever received was to never be afraid to appoint people better than yourself. I’ve surrounded myself with some fantastic people. I have the best job in the world and I absolutely love it.”

Mills has overseen a remarkable turnaround at fixed line reseller SpiriTel since he took charge in 2005, at the age of 32. He has orchestrated an aggressive acquisition, with the financial backing of Penta Capital and Clydesdale Bank, which has seen SpiriTel purchase 11 companies in four years, and five in as many months. The company now has nationwide coverage, with new operations in Wales and Scotland. Its headcount has doubled in the period, from 60 to 130.

But things were a lot different when Mills was asked to turn the company around five years ago, on the back of strong experience of corporate finance at KPMG and procurement at Telewest, where he looked after all its outbound national and international traffic. Mills relished the prospect of being SpiriTel chief but he admits he was overwhelmed at the time by the task ahead of him.

“When SpiriTel listed on the Stock Exchange in 2004, I was asked to run the wholesale subsidiary. Within a year though, the Group was pretty much insolvent. It had been taken down the hosted IP route with investment of £1 million but didn’t have any customers. It was practically all over. I was asked to take over the Group and also to come up with a new strategy. I was only 32, and perhaps the youngest chief executive on the Stock Exchange. I didn’t have a clue what I was doing. But I’m still here today, and the business is making money so I’ve done something right.

“The ‘buy and build’ strategy struck me then and, moving into 2006, I spotted the consolidation opportunity. Mobile, fixed line and systems were all moving together.

“It was only an idea at that stage; I had to convince Penta to stump up the cash. But over time that has happened; the latest, a cheque for £10 million came last November. We realised we had a vehicle for growth here, listed on the Stock Exchange already. So what were we to do with it? That’s when the light bulb moment came.”

Early growth
The wheels were set in motion in 2006 with SpiriTel’s first two acquisitions, followed by the division of the business into two separate divisions: SpiriTel Business and SpiriTel Technologies.

The former is dedicated to serving business customers with a fully integrated voice and data portfolio directly to them. It is organised around three product lines: Networks (fixed line voice, broadband and line rental), IP Communications (telephone systems, Wi-Fi, an advanced range of IP networking services alongside traditional structured cabling) and Mobile (voice and data services, including BlackBerry and other converged voice and data services).

The latter provides a fully managed service and brings together new IP-based telephony technologies, offering network infrastructure, product support and wholesale voice services.

Says Mills: “Going into 2006, all we had was technologies. There was no business division, and we only had wholesale customers. We wanted to go and get direct business customers, own the customer relationships ourselves and try to provide more services to them.”

The formation of these divisions came at a time when the convergence of technologies and sales channels was in its infancy, meaning potential customers were bamboozled much of the time by SpiriTel’s broadening product portfolio, and the communication solutions available to them. But they wanted to rationalise supply of such complicated services at the same time. The company now has 19 core products in its portfolio across ‘Network Services’, ‘IP Communications’ and ‘Mobile’.

“A couple of years ago Ofcom research showed 86 per cent of SMEs wanted a single supplier for their telecoms services. That’s what customers want. And we set up those divisions with those products in order to satisfy that demand to supply the whole range of services. That’s why we’ve been successful – customers need to know over the next few years that their supplier can take them through that rapid change.”

Full article in Mobile News issue 461 (April 12, 2010).

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