Q&A: Cable and Wireless UK CEO Jim Marsh

Jim Marsh took over as head of the UK's 'second telco' following the departure of then-CEO Francisco Caio in April. Marsh took the helm of the company as it reported faltering profits, mass redundancies and ditching its consumer ISP Bulldog amid a raft of customer service complaints.

silicon.com caught up with Marsh to talk about the turnaround struggle, competition with BT and the company's exit from the retail market.

silicon.com: How have things been going since you took over?
Marsh: It's never a dull moment. I think the message is: we are in a full-on turnaround in every aspect of our business, so there's a huge amount to do. We're six months into a three-year journey. There's a lot to do - it's very exciting.

Where did things go wrong for Bulldog?
I don't think it did go wrong. We built out a very extensive local access network which is a very important, significant asset for the business and we continue to invest in it.

What happened in the consumer broadband market was that the market moved on - what do we do? Do we continue to pursue investment in a market we don't think is right for our shareholders any more or do we refocus? So what we did was refocus on core capability - the prevision of network services.

The challenge in the market is the level of price competition. It is very demanding. There is a question how the players in that market can deliver long term sustainable returns.

You've described C&W's turnaround as a journey. Where are you on that journey?
The journey is going towards establishing us as a provider of fully managed telecoms services to multinational corporations that have a significant UK presence. We have a big UK network but we also have massive global connections that have not previously been fully emotionally linked into the UK business. It's been technically linked-in, it needs to be more than that. So that's a big focus for us. We've got fantastic assets - the access network, our core network, international reach, and we need to really deliver utilisation of those assets.

You say customers are crying out for a better quality of service - that's not something that was traditionally associated with Bulldog - do you think there will be any hangover from that?
I think it's not relevant for Bulldog - that was the consumer issue. I would accept that historically, in the UK, Cable & Wireless is not renowned for that service. That's why we acquired Energis, that's why the new management team was put in place - it's all part of the turnaround process.

And what about redundancies?
It's inevitable when you have a business with the difficulties we had, there's going to be some redundancies. Our responsibility is to make sure we have the right employment and opportunities for the future for the right number of people.

What we've done for people that are with us is a number of things which have made it feel a lot better for them - we've made them all shareholders, we didn't have to do that, and we've launched a new bonus scheme.

You have to make tough decisions. There was too much cost in the business. I think it's inevitable there will be more people leaving the business [C&W previously announced up to 2,500 redundancies in the coming years]. We're not going around hiding it, we've been very open with staff and colleagues about the journey we're on.

How's morale?
We do colleague surveys and the feedback is that morale is on that up, because of things I've talked about. The main message that we're getting from people - even the people that are leaving - is that we're getting real traction on the turnaround.

A recent memo from [C&W executive director] John Pluthero to staff said the company was "underperforming", in "a crappy industry" and that it would be "hell for the next 12 months". Is that still true?
It is absolutely true that our industry has fundamentally not delivered great customer service. It's absolutely true the industry has a lot of challenges to face into. It has been difficult for people in the business: no one wants to see colleagues they've worked with for five or 10 years leave. They are seeing we're facing into our problems, not running away.

I think we are where we expect to be - six months into a three year journey. I wouldn't call it - from my perspective - it's not hell.

C&W is looking for double-digit growth. Where do you expect that to come from - will customer acquisition be a large part of that?
We are selective about the customers we want to win - picking right ones and winning. Of the major ones since the acquisition we've targeted, we've won eight out of nine.

We've very targeted about the kind of customers we want to win and then we go at them very hard. It's all back to the focus point - what BT do is play on many more pitches than we do. We are focused about where we want to be.

The days of just trading minutes across carriers is not what most customers want.

Do you expect to take business off BT?
Yes - well we are. We've faring very well against them on the target list we've been working to. We're picking ones where we want to win.

And what's your opinion of Ofcom's dealings with BT? [Ofcom had threatened to split BT up but settled for the creation of a separate wholesale access unit, BT Openreach.]
My personal view has always been the only way to really solve issues we have in the UK is the separation of BT. We are of course giving Openreach the opportunity to be a success but we're not relying on it being a success. We're actively ensuring we're reducing our dependency. Having an access network we can provide corporate access over means we're less dependant on BT.

Will there ever be a BT-free Cable & Wireless?
Our customers want a BT-free environment. They want proper competition in our industry. Our customers want us to do that. I think we will never be entirely free of BT - there will always be a part of the geography where it's not economic to have more fibre dug in. I think it's the nature of carriers to all trade with each other.

What plans do you have for next-generation technology?
Again our approach is very different to BT's. They've nailed their colours to the 21CN mast which is interesting because we are BT Wholesale's first or second biggest customer, so they need us to make their business case work, they need us to transfer our business to the 21CN.

Everything I'm trying to do with our business is not to do that - I want to reduce our dependency on them. I see a fascinating challenge for them, they're working in opposition to their customer.

In terms of where the technology is going, the move to IP is something we're not forcing on the customer. Our philosophy is to make the customer aware of the benefits and the potential downsides and, when it's right for them, have them make the move.

Where will you be making your next big bets in terms of investment?
Rolling out the access network is important. Investing in more people who understand and can deliver the service proposition is important - it's a different set of skills in the management case.

Management across multiple carriers, across multiple technologies, across multiple geographies is very important and also we are investing a lot of time in insuring we are working in partnership with other international carriers whereby we can provide better reach - so we are not about to stick fibre in the ground round the world but what we can do is work better in partnership with carriers in other countries if we're confident they meet our service standards. Developing better partnerships is also important.