Flow-ing as usual
Columbus looking forward to customer gain from CWC merger
It is business as usual at Columbus Barbados, despite the acquisition of the company by Cable & Wireless. And while Columbus is pushing ahead with its plans, it is also moving to assuage public concern about the deal.
Barbados TODAY’S Senior Reporter Carol Williams yesterday spoke with Columbus’ managing director Niall Sheehy.
What prompted Columbus’ decision to sell?
Financially, it was obviously a very good deal; but, secondly, the structure of this deal means that even though it’s an acquisition, three of the major shareholders in Columbus now own just under 40 per cent of the new combined entity. Therefore, even though it’s an acquisition, we’ll have significant impact in controlling the destiny of the new company.
Also, as part of that deal, the senior management was recently announced, and there are a number of key senior management positions being held by Columbus people –– and also obviously by CWC people.
And I think that deal and the structure of it is probably what made it attractive as opposed to what you would normally see which is: “Here’s your money.” “We’re gone; we’ve nothing more to do with it.”
You do see all of the main principals still involved in the new entity, still involved in the senior management team, still involved in shaping the identity and culture of what the new combined organization will be.
Customers were under the impression that Flow was doing well financially and making a mark. Was the company building out too quickly?
No. I think, if anything, it’s an endorsement of what we have achieved in such a short space of time. We’ve achieved significant success. We have three divisions to the business: the wholesale side; the retail side, which is the Flow brand; and the business solution side, which are performing on track with what our long term plans were.
And I think, if anything, the fact that four or five of the largest companies in the region came and tried to acquire us is really rubber-stamping what we have achieved. This is not a deal whereby we needed to sell. This is really a deal where of the suitors out there, Cable & Wireless was ultimately the most successful.
[Cable & Wireless] looked at what we have achieved and looked at what we are planning to achieve, and believe that it’s something impressive, something that they think their organization can benefit from.
Columbus started ten years ago and now employs roughly 3,000 people across the region. How difficult has the road been getting to this point?
Like with anything else, it had its ups, it had its downs. Thankfully for Columbus and for Flow, it has been mostly ups. From a Barbados perspective we only turned up our first customers in the middle of last year, and it has been almost all ups. The Barbados public has responded very positively to what we’ve had to offer.
Yes, there are hiccups and there are glitches, and there are changes; but in general I would say it has been a very positive experience for everybody involved. Even if you look at the key players –– Brendan Paddick who is our chairman and CEO, and John Reid who is the president of Columbus Communications, and Paul Scott –– all these people have been there from the very start.
Columbus Communications has previously acquired a few companies as well. Is this just a natural course for companies in general?
What you’re seeing across the world is consolidation. We’ve seen it in North America with a number of companies coming together; and the reality is that the environment is changing constantly. What we did five years ago is very different from what we do today, as I’m sure it’s going to be in five years.
The Caribbean is a small market . . . . I think if you look down the line, we have a very large competitor in this market; one that’s significantly bigger than us financially, and significantly bigger than Cable & Wireless, both from a subscriber perspective and financially –– and significantly bigger than both combined. The new entity combined will probably have under six million subscribers, [while] our largest competitor has 14 million subscribers in 32 countries, earning significantly more revenue.
They have built a tremendous business over the last ten to 15 years and enjoy tremendous success and if you look at our combined entities going forward, the best way for CWC and Columbus to try and disrupt that and compete in this business is to combine.
Some of your customers, including businesses, made the switch though from LIME to Flow. What do you say to them?
Absolutely, a lot of them. From a Barbados perspective, we launched 18 months ago. We’ve had tremendous success. People have come across to us in droves and are very happy with the service that they have received and, I won’t lie to you, that’s been one of our biggest complaints in the last months since this has been announced.
Customers have called us up and they’ve said to me and our staff “We’re not happy”. They came to us for a number of reasons: our pricing, our service, our quality –– and in some cases they were unhappy with the provider that they had. So some of them are . . . expressing emotions that are not positive.
We are saying this merger is about building on the positives. It’s about looking at what Columbus does well, looking at the network, looking at service –– all those elements that we do well; and looking at what CWC has done well; taking the very best of both to try to create a new entity that can compete effectively with fairly significant dominant players.
This will allow us to compete more effectively.
You mentioned getting calls from customers. Has there been any backlash though, because there have been concerns, especially as it relates to this likely monopoly of fixed lines?
When it was announced, I spent the first two days meeting every one of our staff, explaining to them what was going to happen, the process we were going through. And the exercise I’m going through now is to try to speak to customers. We did write to them. Yes, there are concerns.
In terms of backlash, not major other than people calling in; and I meet people, and they say: “We’re not happy. We were very happy with the fact that Flow had brought something new to the game.” What I say to them is: “Give us three to four months. What we’re looking to do is to bring the best of both worlds together. You have my commitment that you’ll have
at least as good a service as you have today.”
There’s a misconception out there . . . . This is what I’m hearing: “LIME has bought Flow. Flow has been shut down and it’s all going to go back to the way it was two to three years ago.”
And if that happens, the new joint entity will fail because our competitor is going to take all the customers.
What is the plan going forward as it relates to timelines and the name of the company?
Right now it’s very much business as usual; so we have our Wonderflow Christmas, we have our Twelve Days Of Christmas coming up. We’re still [fulfilling] our corporate social responsibility; all the initiatives that we’ve worked with are all ongoing, and that’s going to happen until we get approval; and we anticipate that’s going to be a three- to four-month process.
Applications have been submitted to the FTC [Free Trade Commission], which they’re reviewing and have come back and asked for more information; and that’s a process. The CTU [Caribbean Telecommunications Union] I believe is meeting today [Wednesday] in Trinidad to give their view on the acquisition. Once the territories that have to approve it have done it, we would like to make the merger in the next three to four months. Certainly, that’s the next phase.
In the meantime, there’s a dedicated integration team that is working on 12 streams –– everything from human resources to network. They are entirely separate from the operations. I have no visibility of what they are doing, and what they’re looking to do is to come up with a plan on how we could integrate this business in the future.
It has been said that Flow’s customer service is above that of LIME’s. How much of the Flow “personality” would be retained in this mix?
A. John Reid, the president of Columbus Communications, was recently announced as the new senior vice-president responsible for retail (in the new company). So that means the LIME and Flow brands will report to John, who comes from Columbus. So John has made it his personal passion.
He has got two very important goals. He wants to make Columbus, and now the new combined entity, the number one employer of choice in the region. That’s not just in telecommunications; that’s across everything; and we have already launched initiatives to put that in place.
What he wants, and what we want as a company is for people to want to work with Columbus CWC, the new entity; and we’re making plans on how we can make that happen. He also wants Columbus CWC to be the number one provider of customer service in the region.
Again, that’s not just in telecommunications; that’s benchmarking ourselves against every other business. We’ve already launched a significant initiative on that front. It’s called Our Customer Experience.
I’ve been involved in workshops for the last five to six months whereby we have recruited some key industry players worldwide who are advising us on how we can enhance our customer experience.
Give some more information on this deal. What does it mean beyond the US$3 billion that we’ve heard about?
The details that have been announced is that it’s US$3.02 billion of which US$1.2 billion is related to debt. The fact is that John Risley, who is our major shareholder in Columbus, now owns 20 per cent of [the new company] with this new deal when it’s approved, and John Malone will own 13 per cent, and Brendan Paddick will own three to four per cent . . . . That’s as much of the deal that has been announced . . . .
Under normal purchases, I guess, people walk away and they’re gone. These guys haven’t gone.
So the two companies will remain separate for now and be combined at a later point?
The plan is that it’s going to require three to four months to go through the stages of approval. Various jurisdictions have various requirements, but certainly the company would like for both to be merged within three to four months. That’s the kind of time frame we would like to see happen and we believe is achievable.
At the end of that, a new entity would come out. It would be a combined entity. What that entity would be called, I’m not sure. so I guess that decision is going to be part of [what is looked at] by the integration team. When we come to the end of this process there will be announcements around that.
What will happen to the employees?
We have here in Columbus Barbados about 240 employees. I don’t have visibility on LIME, as I’ve said, but from what I read
in the papers and what I’m told, they have around 200 employees in Barbados; so, as a combined entity, that is not a large amount of staff.
We’re continuing to take people on; we just took on some staff. We’re continuing to construct; we’re continuing to launch new services. Will everybody be doing the exact same job that they’re doing today in four months time? [That’s] unlikely.
Will there be some areas where we need to consolidate? For sure; but there’s certainly going to be some significant opportunities as well for people?
So resources will be redistributed where necessary?
For sure. We don’t have any mobility capability. We don’t have a mobile network . . . . So there are going to be some areas where there are crossovers, but there’s also going to be lots of new areas. We’ve launched a whole raft, and are about to launch a whole new suite of services that require resources to support it.
So, again, in four months’ time . . . there’s definitely going to be a lot of opportunities for people, but there will also be some duplications.
What will happen to your Orange Mall headquarters that
is under construction?
That’s continuing as planned. I was just over there yesterday. I’d very much like to be there by the beginning of next year. As I said, it’s full steam ahead for now, and it’s still Columbus Telecommunications Barbados. We’re still looking to get the Flow brand out there.
Tomorrow [Thursday] I’ve got a meeting with Columbus Business Solutions customers. So it’s very much full speed ahead. Orange Mall is still opening; we’re still constructing; building out. In fact, we’re accelerating our construction.
When is it due to open?
We’re hoping to have it by February.
What will be your future in this whole mix?
That’s part of the process right now as well. We’re going to look at all of the roles. I’m ten years [working] in the Caribbean. I spent eight years in Jamaica. I work very much for Columbus.
I’m not a contractor who is in for a one-year, three-year or four-year contract. I am a full-time employee of the company.
My wife is from Jamaica; my son was born here; so I very much consider myself a Caribbean person, as much as an Irish person. So I think where I’ll sit in four months is part of the discussion that is going to go through the integration as well.
What specifically does the agreement between Flow and the Barbados Government say regarding mergers?
As part of the process that we’re going though, we do have to get approval from the FTC; so Phil Bentley and Brendan Paddick have been down and met with the Prime Minister. They’ve also met with Minister [Donville] Inniss. They’ve also met with Senator Boyce; and they’ve also met with the Fair Trading Commission, and all the stakeholders.
Actually, I’ve been out to meet with some of the stakeholders of the different Government entities to get their views and opinions, because we want to take it all into account . . . . We’re confident that the case that we’ve put forward is very positive. We think it’s very good for people in Barbados. We think it’s very good for customers in Barbados.
It means that we can now offer a full suite of enhanced services; so we’re confident the FTC should approve it.
The companies announced plans to commence consumer panels this week. When is this going to start in Barbados?
That is part of what we’re doing here today [Wednesday] actually. So, I’m meeting customers to get their feedback, to get their experience, because we’re constantly learning; and I’m sure some of them will have strong views on this, and we’re going to take that into account. This merger is all about looking forward.
Columbus is ten years; Cable and Wireless is 100 . . . ; so very different histories, very different pasts. But what we want to do is build something new, and take the best of both and build a new organization and that’s very much the philosophy from the top down.
We feel that if we come together we can build something that’s much more positive for customers, much more positive for employees; and I think that’s why you’re seeing so much resistance from the competitors.
Digicel has said that US$3 billion was too much for Flow. Digicel was itself in talks with Flow to purchase the company. What is your response?
I think there was a process, and there were up to five companies that bid; they all bid significantly more. I don’t think I can disclose who they are, but they’re very large international companies that have a strong track record and they valued the business as significantly more than what our competitor here has valued it.
So, as with anything, you look at what’s strategic to you, how much you want to pay for something; and CWC said strategically it was the right price and there were others that felt that that was the right price for it as well.
So, how much is anything worth? I guess it’s what you pay for it.