The word 'free' lost its meaning and credibility sometime during the last decade. But most people already knew it was a complete misnomer and should be devolved to a mere footnote in the English dictionary. So, it came as quite a shock to hear Jeremy Corbyn on the radio on November 15th discussing how a Labour government would deliver fibre optic broadband to every home in the country for 'free', and it would cost around £20 billion. There's the first simplistic paradox of the word 'free' immediately - 'and it will only cost £20 Billion'. So, someone IS going to pay the cost of delivery after all, so it can't be free – and that someone is us!
Then the lies were exposed about the true cost of providing such a 'free' fibre broadband service to everyone. Later that day, the CEO's of Britain's largest broadband providers (BT, TalkTalk and Virgin Media) went ballistic in the Evening Standard newspaper, outlining that the true cost of delivering this promise would be closer to £100 billion. BT Openreach – which would be nationalized in the process – went further. Who would then pay the annual BT cost of its pension scheme (billions) to former employees when the company will no longer have any income coming in? Of course, it would be us again!
The knock-on effect could be catastrophic for competitive fibre broadband providers such as Hyperoptic, Gigaclear, Cityfibre and Zooom. These companies have invested hundreds of millions to deliver fibre broadband to people's homes. What is to become of them if the price of broadband in the market is zero? Further knock-on effects will impact every competitive fibre provider (including us) endangering many thousands of jobs in our industry. Since this Labour policy announcement, there has been dozens of articles deriding this policy as absurd at best and extremely naive at worst. One designed simply to fool the people in exchange for their valuable vote.
For those interested, one of the best articles is by Phil Carse of Megabuyte and he states:
"In conclusion, we estimate that the plan to give away broadband (which currently attracts estimated revenues of £10bn) would basically wipe out two thirds of UK telecoms industry EBITDA profits of £16bn (and hence the funding for current capex of around £8bn) as well as cause untold disruption to a very competitive, innovative industry that provides a crucial underpinning to the emerging digital economy, endangering many thousands of the estimated 200k jobs in the industry."
His article Costing Labour's 'free' Broadband can be read in full here.
The unpalatable truth is that if Jeremy Corbyn and John McDonnell are elected, the British economy will – for the first time in its history – become a Marxist run state. Two former Labour Prime Ministers (Tony Blair and Gordon Brown) know how dangerous this is more than most and have advised voters to abstain or vote for the Conservatives. You couldn't get a more knowing and authoritative warning about the current Labour leadership than the last two Labour Prime Ministers . . .
Looking forward into 2020
We began the process of business planning for 2020 back in August of this year. Since then, there has been several Executive Management meetings to discuss the main investments we shall be focusing on for the new year ahead. And there are many options vying for the investment funds we will have at our disposal.
Our approach has been to assume in the first instance there will NOT be a Labour government on December 12th. (But who knows what the polls may bring?). On that basis, we have exciting plans in place for job-creation and capital investments. Some of the cornerstone elements are summarized below in Fig.2:
Fig.2 Focus on Strategy and Investments
As you can see, we are lining up investments in areas such as implementing a Global SD-WAN infrastructure stretching into 10 global cities followed by a further 10 cities should the first 10 prove successful.
Each of these areas require substantial investments in both people and infrastructure/hardware, and those are the foundations for the strategy we intend focusing upon. But the plans submitted so far by each of the departmental heads amount to an extra 180 people! Clearly, we cannot stretch our budgets to a 33% increase in staff, however, the election result will feature heavily in these investment decisions.
But for now, let's just focus on two very important areas shown in Fig.2: M&A and then Futures and Relevancy.
Mergers & Acquisitions
We stated earlier in the year that for the first time ever, we would look at acquiring another company following 17 years of organic growth. The rationale for this is set out below:
- Acquire the skills and experience we need (and struggle with to recruit) to supplement those we already have
- Extending our regional geographic reach in the UK - will also help with recruitment
- To enhance and complement our existing Product and Services set
- Relevancy – delivering new services into buoyant markets – see the next section
- Access to new customers and markets – gain market share
- Clearly, such a move will also boost our top-line revenues and EBITDA performance
As expected, the search has been long and hard. Ultimately, if we could find such a company that meets most of the selection criteria above whilst also having a similar culture, ethos and values to our own, then that would be fantastic. However, it is a very tall order just identifying such targets, never mind finding one where the owners are willing sellers.
Following a number of approaches we made throughout the year, we have actively engaged with two such companies. However, it's all I can say at the moment because of the strict confidentiality required. What I can say is that both companies have around 120 employees and are outside London. Both companies would complement Exponential-e in ways that could take us 5-10 years should we choose to build them organically. So, if we proceed to a conclusion with one of these contenders, we would hope to be in a position to announce it publicly during Q120.
Futures and Relevancy
Our new 'acquisition' approach will help us in a number of ways if we can pull off the deal. One of the ways to remain competitive is to ensure the products and services we take to market are both timely and relevant in the market place. Time-to-market is critical. Miss the window of opportunity and you are merely an 'also-ran'. But what is 'relevancy'?
Today, we live in a time of constant change and heightened customer expectations. The greatest danger facing most brands today is loss of brand relevance. People are ultra-connected. Markets constantly shift. New trends emerge. Competitors enter and shake things up. And customers expect more from the brands they buy from. As a result, many businesses struggle to stay relevant – trying to get ahead of competition, adapt fast enough, and maintain their position in the market. These are the real challenges we face in attracting new staff and customers, and indeed, keeping the ones we have already.
We have already started the conversation about future services and relevancy as can be seen in Fig.3 below from Jonathan Bridges:
Fig.3 Slide from 'Futures – Relevancy' presentation by Jon Bridges
However, there is much more than just new products and services that drives relevancy. We must simultaneously address the issues around our brand, purpose and culture. These are the complementary drivers that will help deliver relevancy. All three work together to drive one another - and each are interdependent if you want to stand out from the crowd. Simply embracing purpose is necessary, but not sufficient. Even the most talented people aren't going to drive you into the future without a clear vision of what that future looks like. Likewise, a highly strategic and perfectly designed brand won't succeed without purpose-led people who can bring it to life.
Alas, there is great depth to the topic of futures and brand relevancy, and I shall be discussing this in depth in the January issue of Innovate.
What Differentiates Us
Exponential-e is a company that stands for trust, integrity and customer service excellence.
Our CultureThe company is driven by our model of delivering Applied Innovation and Dynamic Disruption.Our culture is based around the premises of learning, meritocracy and shared-success.
Our PurposeSustain the status whereby Exponential-e is acknowledged among our peers, competitors and clients as the most advanced and innovative business technology enabler in The World. A 'world-class company...'
November Sales Update
The sales teams pulled off another remarkable performance during November – beating the sales forecast by 6.34% and smashing November 2018's sales figures by a whopping 10.85%.
November sales forecast = £3.165m
November sales achieved = £3.567m
Given the on-going, turgid state of the economy and the markets, November's result means we have clawed back more of the ground we lost in September (see table below) to being just 11.56% off of 2018 (Year-to-Date) which was a record sales year. This is a great start to Q419. But as mentioned last month, let's see if we can repeat this collective effort again to beat Q418's £11.343m. This is a big ask given the further uncertainty we face with the impending General Election in December. November and December will both be formidable mountains to climb, but it won't be the first time we've planted flags at the summit, so to speak . . .
Table 1: Overall Sales Year-to-Date
Once again, a big thank you to all our staff members for your tremendous efforts during November. Every area of the business has worked so hard to drive a very good result against a very difficult and constrained market place . . .