Capturing Opportunity: Privately Owned Telecom Enterprise

George Head as the new CEO, captured employee trust and commitment necessary to transform the Company’s core business to a competitive, growing enterprise. Its success ultimately attracted a strategic buyer. Further, the CEO aligned the goals and market approaches of its wireless partners which achieved significant ROI when sale to its major affiliate was consummated.

SITUATION

The Board of Directors recruited George Head to be President and CEO to lead a privately owned local exchange (LEC) telecom enterprise in the midst of significant industry change driven by new technology, deregulation and competition. The incumbent President had been in the position for over 30 years. A traditional land-line service provider, the company had also recently partnered with two similar private companies via FCC spectrum auction to enter PCS wireless market in several southern states.


OBSTACLES AND OPPORTUNITY

Opportunities to grow product lines and geographic market were substantial, as were threats for a company of its size to lose profitable segments of its franchise.

The owners had made a bold move (later paid off handsomely) to partner and win spectrum in the PCS auction, but an operating plan was required and the capital calls were imminent for build out.

Employees had limited awareness of issues and required information and trust to change paradigm to a competitive, growing business. Reputation of company among employees was essential to recruiting and retaining talent. Measures (metrics and KPIs) of customer quality, employee productivity and product profitability needed to be developed.


ACTION

Board of Directors and Owners’ education was essential in the regulatory environment, competitive threats, opportunities and employee perspectives. Once they understood the situation, the business plans and funding discussions were meaningful and robust.

For the legacy business, plans were developed and funded to establish new offerings in emerging Internet access business, Long Distance (resale model), landline expansion and preparation for video (TV).

Executive management changes were required in HR, Operations and Sales to provide the leadership experience and management skills essential to achieving the goals.

Frequent “town hall” meetings were held with employee groups to provide visibility to environment, business plans and new leadership. Smaller meetings were held with Supervisors and Managers to align support and mutually align values.

HR programs were implemented:

  • Hired HR Manager
  • Improve fairness and awareness of compensation structures
  • Talent acquisition strategies
  • Performance management systems to align rewards with business plans and success.
  • Supervisory and management training
  • An IT consulting firm was acquired to perform routine support of operating systems, desktop devices and applications. The core of this group developed externally marketable applications for billing and customer care.
  • The wireless partnership was restructured to:
  • Affiliate with a major carrier which changed branding, reduced $60 million in debt and accelerated revenues from roaming.
  • Better align the management skills technical experience and preferred target markets of the original partners.

RESULT

Employee awareness of business drivers and results lead to understanding and support of management decisions; engagement in growth initiatives; and individual development.

In 3 years, the legacy operation grew from 150 to 300 employees, entering several new lines of business and increasing enterprise value from $85 million to $230 million.

Attracted attention of strategic buyer, resulting in profitable sale for owners.

Aligning wireless partnership goals and improving communication lead to restructured partnership, strategic alliance with a major carrier and improved results. The effort culminated in a highly profitable sale of the enterprise for $290 million from a basis of $120 million.

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