The Yankee Group in Canada is bullish on Calgary’s Call-Net Enterprises Inc.’s chances of regaining its stride under the leadership of its new CEO, Bill Linton.
“I think it suggests to us that there will be a strategic direction,” Iain Grant, The Yankee Group’s managing director, said from his company’s Brockville, Ont. headquarters.
It’s been a rough year for Call-Net, the long-distance telecommunications provider that is 25 per cent owned by U.S-based Sprint Corp. The company has been hit hard by operating losses, a shareholder’s attempt to force the company to sell its assets, two major CEO resignations, and recent speculation that B.C.-based Telus Corp. would buy out the company.
But Grant said he was impressed with Linton’s vision of turning Call-Net’s national fibre optic network into one primarily focused on data-based services.
“There’s no money in voice,” Grant said bluntly.
Linton is a former CFO at Rogers Cantel Mobile Communications Inc. It appears he is committed to returning Call-Net to its roots as a company that in the early ’90s focused on the small- and medium-sized business market.
Earlier this year, Call-Net’s telephony arm, Sprint Canada, pulled back from its movement into the local residential telephony market, citing poor margins. The company also shed about two-thirds of its excess U.S.-based fibre optic assets to Vancouver’s 360networks for US$242 million in August. That deal also gave Call-Net some metropolitan fibre assets, Grant noted.
Grant said Call-Net is in a plum spot to dominate the SMB market, despite the fact there has been a proliferation of CLECs in the past year all vying for the same customers.
“All of the CLECs we’ve been celebrating don’t have the revenues between them that Call-Net gets in a quarter,” Grant said.
“They have a sophisticated and loyal employee base of 2,200 people. And one million customers who pay them over a billion dollars a year. Any other company in any other industry, we’d be saying this is a Canadian success story.”
Grant did admit Call-Net will be hard-pressed to stem the tide of quarterly losses and cost reductions.
“You can pull the wheel hard over, but it takes a while for the ship to respond to the new heading,” he explained.
However, “they have a brand, a little tarnished now, but they can burnish it up. We think some of the products they’ve got, in terms of Frame Relay and in some of the things they’re doing, are very close to best of breed.”