C&W to act as agent for mobile phone operators and to invest £30m

Cable & Wireless is set to act as an agent for mobile phone operators and to offer a service which includes billing their customers. The company, which is now focusing on becoming an all-Ireland telecom group is to invest £30 million sterling (€44.68 million) in infrastructure, targeting the corporate market.

Mr Gordon Morrice, customer director for Cable & Wireless Communications, said the company would act as another point of entry to the market for mobile operators. It is common in Britain for separate companies to handle customer billing, but it would be the first time a company which was not the operator provided such a service in Ireland.

Mr Morrice says C&W has 3,500 corporate customers in Ireland. Just like a high-street retailer, his company could act as an agent for Eircell, Esat Digifone and the third mobile operator when it comes onstream. "Many customers want just one bill, instead of several, we can handle the billing and we can be a channel to market," he said.

Mr Morrice says many customers want a "one-stop shop" and in such cases billing becomes important. "The question is, do you want a composite bill? We believe there is a demand for it," he says.

C&W has been associated with Ireland for more than 40 years and has brought together its Northern Ireland business and its interests in the Republic. It has several strands to its operations. These include installing and maintaining telephone systems communications hardware - where it has a close relationship with Nortel, the Canadian multinational which has a plant in Galway - and supplying data communications hardware where it works with Cisco Systems.

When the Irish telecommunications market was fully liberalised, Cable & Wireless obtained a general licence. This now enables it to offer a full range of services, says Mr Morrice. The company will focus on the corporate and small and medium enterprise sector.

C&W Communications bought out Cable & Wireless Ireland from the parent company Cable & Wireless Plc last November for £14 million sterling. The parent company owns 52 per cent of C&W Communications, which is listed on the London Stock Exchange.

Mr Morrice said the Irish operations will offer frame relay (data transmission), global voice services such as long-distance telephony and international and local freephone services.

For C&W, liberalisation also means it can now provide its own circuits to customer sites. Not having to use Telecom Eireann for circuits - to provide international traffic services - means the company will be able to enjoy greater economies of scale.

The company employs 220 people in Ireland, mainly in the Republic and recently recruited 25. It expects to take on a further 25 over the coming months.

Mr Morrice says recruiting Irish staff is a problem despite the return of so many emigrants. C&W has a policy of training its own staff and has a college in Britain which cost £16 million. This, he says, "is run on a business basis" training people in the area of telecommunications.

The C&W group employs 40,000 people worldwide and has operations in 60 countries. It has already installed submarine cables from Northern Ireland to England and Scotland and from the Republic to England where they connect with the global network.

Mr Morrice said turnover in the North and the Republic is currently running at £33 million per annum. "We plan to grow this to about £80 million per annum over the next three to four years."

The company has a fibre network across Belfast and is building fibre infrastructure in Dublin. It is being supported by a radio transmission network. It has already invested £40 million sterling in the North in the past few years and the remaining £30 million will be spent mainly on infrastructure in the Republic.

Mr Morrice believes Northern Ireland is poised for "aggressive economic growth" if the ceasefires remain intact. He believes the ability to offer an all-Ireland service is important.

C&W operated for many years through Mercury in the North. Mr Morrice cheerfully admits that it was good when there was only British Telecom and Mercury in the fixed line business in Northern Ireland - Cabletel, and more recently Telecom Eireann have since entered the market. "A duopoly is always good," he says, but he hastens to add that so is competition. "Calls between the North and South are still quite expensive, even though tariffs have been reduced in the last year," he says.

"In the last 10 years telephony prices have probably come down by about 100 per cent," he adds.

And he foresees prices falling further. "They are still going down in the UK," he says. "The question is how to survive when the product price is dropping significantly."

The answer, he says, is to "increase the tonnage" through your network. So much business is now being done through data communications, he says, adding that this is helping to increase revenues. "Who would have thought, say seven years ago, that you could book a plane ticket or get insurance over the phone line?"

He says companies such as Cable & Wireless need to roll out voice and data solutions which cater for the fact that voice and data are converging so quickly.

"It is the same with fixed line and mobile telephony," he says.

Before Mr Morrice's arrival in Ireland, Telecom Eireann and Cable & Wireless did some "courting". C&W offered £400 million for a 50 per cent stake in the soon-to-be-floated State company. However, nothing came of the move and the KPN/Telia consortium bought in.

Mr Morrice says Cable & Wireless carries traffic for several Irish operators and the business, although very competitive, is all about strategic alliances.

Although mooted as a possible contender to buy the Irish cable company Cablelink, at one stage, Cable & Wireless did not bid. "Our strategy now is to focus on the business rather than the residential market," says Mr Morrice. "However, I can't say we won't enter the market at some stage."

Cablelink, which is in the process of being sold, may fetch up to £400 million. Mr Morrice believes that this figure may be a little on the high side.

He predicts that there will be some consolidation in both the cable and the telephony market. "It happened in the US, it's happening in Britain and it will probably happen here," he adds.

He says this is one reason why telecommunications share prices are so high. "I think people expect consolidation and mergers and that leads to the share price increases - many of the companies are not cash positive yet, they are a long-term investment."

For now, Cable & Wireless is content to build its business and its brand, under one name - a move initiated by former group chief executive, Mr Dick Brown, who left last November. Mr Morrice says the company is not actively seeking acquisitions, but like any aggressive telecoms company, would not rule one out.