Colt Communication Services (CCS)
"CCS provides the information delivery platform to customers with a European footprint through indirect sales channels: fixed and mobile network operators, service providers, distributors, resellers, franchisees and agents. We combine state-of-the-art technology and systems with skilled people to provide network, IT and communications services that are easy to order, implement and manage."
Francois Eloy / Executive Vice President
We specialise in the provision of channel-ready transactional ICT services that can be deployed through indirect sales partners who serve the needs of small, medium and large businesses.
Through our partnerships with selected resellers, agents, franchisees and distributors we serve the ICT needs of small, medium and large-sized enterprises. Our wholesale customers include fixed and mobile operators, Internet service providers and other communication providers and resellers.
We provide ICT products and services as building blocks, from simple telephony, Internet and network services to 'pay as you go' software-as-a-service offerings. We manage both the network and data centre infrastructure and offer built-in resilience, security and performance that few can match. Our portfolio is supported by customer service in local language through our pan European network of partners. Our offering includes a broad range of Colt branded as well as unbranded (white labelled) voice, data communications services and network and compute services.
CCS go to market
Colt branded solutions: European businesses seek highly specialised, local advisors to help them navigate the plethora of communications and IT services available to them. In response to customer demand for converged communications and IT managed services we recently extended and broadened our partner base selling Colt branded solutions by establishing two new sales channels, a franchise channel and a specialist distributor channel. Together with our well-established agent sales channel, the franchisees and distributors are taking our Colt brand into the market place.
This year we appointed franchises in France, Spain and Italy, with further expansion planned across Europe. Our Franchise offering includes a comprehensive range of flexible communication, networking and compute options, designed to meet the specific needs of small and medium sized enterprises (SMEs). Franchise partners exclusively provide Colt services in conjunction with their own complementary offerings, allowing them to create a profitable new revenue stream through a range of co-branded solutions and services. Their customers benefit from the expertise and experience of both Colt and its franchise partners, with the franchise partners maintaining the direct relationship with their end-user customers, including all customer relationship management and billing.
In 2011 we announced the appointment of Magirus as our first cloud services distributor, reaching a specialist network of IT resellers who have the necessary skills to sell cloud services to small and medium-sized businesses. In 2012, using Magirus' existing channel, we have accredited more than 140 resellers to offer Colt's vCloud services. The recent acquisition of Magirus by Avnet Inc. has formed one of Europe's largest value-added IT distributors opening up a further opportunity for Colt's offering. During 2012 we also concluded an agreement with Arrow ECS to launch a new Colt cloud storage service through its new ArrowSphere cloud services business unit.
White Labelled solutions: For our wholesale partners our mission is to offer a one-stop 'network solution', using our unrivalled European network capability for delivering both on-net and off-net services. Our customers can interconnect with Colt via a single interface and have access to our entire network capability and assets, underpinned by our automated systems and transactional business capability. This approach proves highly attractive to those providers and operators who want to gain access to the European market as it allows entry into Europe for those who do not have the operational or financial resources to 'build' their own capabilities and network infrastructure. Our product offering includes a broad range of telecommunications and related services including Voice, Ethernet and IPVPN networks along with cloud compute services delivered from our European data centres.
We continually seek to improve the way we deliver services to our customers. We introduced a customer insight programme that allows us to get regular feedback from our customers through a variety of sources. The feedback helps us to continuously improve how we meet their needs. We have also continued to invest in self-service tools and systems that make our business easier to work with.
We have created a transactional services business capability that enables us to deliver high quality, volume-capable, standardised, scalable solutions, which are easy for our customers to order and implement. This includes a range of self-service capabilities allowing our partners to easily check availability and price information for instant quotes. These self-service capabilities can be customised to meet the requirements of our sales channels.
Product and service innovation
In August 2012 we acquired ThinkGrid, a channel-focused cloud platform provider, to complement our cloud offerings for our sales channels. ThinkGrid enables channel partners to become successful cloud providers in their own right by offering them a comprehensive portfolio of cloud-based services with a turn-key management platform and the commercial and technical training required to grow their cloud business. The acquisition has extended our channel community by approximately 300 resellers who are skilled in managed IT services.
We further developed our voice product portfolio for the wholesale market launching a world class SIP trunking solution for interconnection with carriers and mobile operators, fulfilling the IPX standard as defined by the GSMA. We also extended the feature set of our contact centre services delivered via our state-of-the-art Intelligent Network (IN) platform. This product family provides network-based sophisticated routing and reporting functionality enabling customers to manage call centres with distributed agents and access from all over Europe.
In 2012 we also enhanced our data services portfolio. Several managed security services have been added to the IP Access and IP VPN portfolio and the service reporting capabilities of our Ethernet services has been updated, leading to an improved customer experience. We have also standardised our 40G and 100G Ethernet transport services. This has been the eighth consecutive year that Colt has won awards for its Ethernet services, confirming our leadership in the industry and the strength of our pioneering portfolio.
Colt's network is critical to delivering reliable, comprehensive IT and communication services to our customers. Our network includes direct fibre to more than 19,000 buildings including 20 state-of-the-art Colt-owned data centres, with Metropolitan Area Networks (MANs) in 39 cities. During 2012 we added almost 1,000 new buildings to the Colt fibre network including 18 strategic business sites and 30 third party data centres. We also added points of presence in 10 new cities across Europe, including Keflavik in Iceland. We have strengthened our international network with some significant new fibre routes including three new ultra low latency routes and a new route between London and Dublin.
We continue to invest in our network and access capabilities to ensure we deliver an optimal information delivery platform for our customers.
In the fixed-line market Colt competes primarily with the local and national incumbent Public Telephone Operator (PTO). For voice, data and managed services traffic Colt competes with a number of alternative service providers, and for cross-border business pan European operators provide further competition. The voice market is also subject to competition from VoIP operators, who have offerings in the small and medium size corporate markets. For our access and networking services we see most competition from the incumbent operators as well as regional carriers and service providers. From a pan European perspective there is limited competition that can match Colt's network reach and service offering.
CCS financial performance
Total revenue grew by 4.7% to €957.7m (2011: €914.7m) driving EBITDA growth of 4.5% to €194.8m (2011: €186.4m). EBITDA also benefited from a lower bad debt expense and reductions in Voice cost accruals.
Data revenue in 2012 grew by 5.5% to €454.6m (2011: €430.7m). The Ethernet portfolio continues to deliver strong revenue growth, as does IP services particularly the IP Voice and IPVPN products. Revenue from legacy Data products continues to decline partially offsetting the Ethernet and IP growth. In 2012 Managed Services grew by 8.9% to €38.0m (2011: €34.9m) augmented by the acquisition of ThinkGrid. Carrier Voice revenue reversed the declining trend seen in recent years and increased by 25.4% to €245.0m (2011: €195.4m) driven by International traffic and extensions in Voice over IP-based interconnect relationships, helping to offset regulated rate declines.
Corporate and Reseller Voice revenue declined by 13.2% to €220.1m (2011: €253.7m). Regulatory and competitive pressures continue to drive the decrease, however the decision to withdraw from a specific reseller market in Spain has caused a third of the annual decrease.