Cable and Wireless and Energis have both reported better-than-expected interim results.
Cable and Wireless on Wednesday reported excellent half-year results, with sales and profits rising despite disposals of several of its businesses. The firm’s strategy of selling off its consumer arm to concentrate on business service provision seems to be paying off. Unlike many telcos, instead of having large debts, it has a significant cash surplus to carry out relevant acquisitions. Business communications provider Energis also reported excellent results, with a 71% profits rise; this again follows moves to divest consumer supply businesses.
An important part of both companies’ business communications strategy is web hosting and application provision. Cable and Wireless has bought a clutch of ISPs, web hosting companies and IP network specialists around Europe as part of its $3.5 billion worldwide expansion plan, moving it to third place in the continental European market for Internet services. It is now in a position to offer a spectrum of services from basic Internet access to more sophisticated ISP services across Europe.
Whilst Energis’ core business is the supply of voice and data products to business customers through its expanding pan-European optic fiber network, its eBusiness arm Energis Squared is also important. This is a UK Internet services and eBusiness solutions provider, hosting many thousands of web sites from two data centers in Leeds. Its servers and web sites sit directly on the Internet backbone, accelerating communications and improving efficiency.
The successful hosting service providers (companies which provide space in data centers to host other business’s web sites and applications) will move beyond basic hosting services to value-added managed services, including security, monitoring and eCommerce in the dedicated/managed service provision space. Over the next few years, dedicated services will be the fastest growing area in terms of revenues, accounting for 42% of the total European web hosting market by 2004.
Cable and Wireless is already in a strong position in the dedicated/managed space due to its global reach and current web-hosting offering; the company’s enormous war chest should help it successfully expand further. Although Energis Squared currently only operates in the UK, its parent company’s European network should help it expand into Europe in future. But it too will need to offer managed services if it is to compete.
