May 2008 - Interview with: Global Telecom & Technology, Inc. (GTLT-OTC: BB) , President and CEO, Richard D. Calder, Jr. and CFO, Kevin J. Welch - featuring: their Multi-Network Operator services to over 300 leading enterprise, government, and carrier customers, in more than 70 countries, worldwide.
|Global Telecom & Technology, Inc. (GTLT-OTC: BB)|
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Global Telecom & Technology Eyes Bright
Future In Global Telecom Market
Better Way to Buy and Manage Communications – Global Telecom
& Technology (GTT) is a new breed of telecom service provider – a
Multi-Network Operator. Committed to providing businesses a dramatically
better way to source, buy and manage their communications needs, GTT is an
independent, knowledge-driven, and customer-centric service provider
unconstrained by the limits of any one physical network. GTT’s expertise,
vendor relationships, and commitment to outstanding customer service,
delivers tremendous value to enterprise, service provider, and government
customers around the world.
GTT was founded on a simple vision: offer customers customized telecom services based on their needs, not the limitations of individual carrier networks. Where facilities-based carriers are bound by the strengths and weaknesses of their own network, GTT has the freedom to combine the networks and technologies of many carriers to satisfy its customers’ network requirements. GTT leads a new breed of telecommunications carriers known as Multi-Network Operators (MNO). Unlike traditional, network-centric telecom carriers, MNOs have access to hundreds of telecommunications carrier networks worldwide, and are experts at sourcing, integrating, and supporting best-of-breed connectivity solutions for its customers.
Mr. Calder: “When I joined GTT in May 2007, I saw real opportunity for GTT’s two recently acquired companies - Global Internetworking, Inc (GII) and European Telecom and Technology (ETT) - to merge into a single growing and profitable business. These acquired companies had reasonably flat revenue growth and had been losing money. So, job one was to combine these two companies together into a much stronger whole. Since I joined, we have produced two successive quarters of profitable growth. We created a unified global sales force, centralized our operations and streamlined the finance organization, and, thanks to Kevin’s efforts, have a healthier balance sheet, raised new capital, extended and converted some existing debt, and put a bank facility in place. Taken as a whole, we feel very comfortable about the progress that we have made at the firm.”
CEOCFO: What is your core offering today?
Mr. Calder: “We provide a complete series of data network services to large direct accounts, including private line, Ethernet, and dedicated internet access products. We also sell virtual private networks, Managed Network Services, and wireless mobility services. These direct accounts include large banking, automotive, and government clients as well as a series of carrier accounts who want to extend their facility-based network footprint to serve their customers. We recently launched GTT Hub Service – a cost-effective private line network offering that is already yielding returns in the marketplace.”
CEOCFO: Why are these various entities choosing to go with you; what sets your services apart and will you tell us about the competitive landscape?
Mr. Calder: “Customers choose us for our expertise in crafting multi-carrier customized solutions, especially in difficult to reach parts of the world, where local legal, regulatory, and cultural expertise is required. Customers appreciate our global project management capability. As customers expand into new markets, they do not have the time or inclination to become telecom experts in the markets they are serving and the burden of coordination is more than some companies choose to bear. They prefer, instead, to rely on our expertise in designing, deploying, and maintaining these services on their behalf. In terms of competition, our primary competitors are international facility based carriers - like Verizon, AT&T, and Global Crossing - and regional carriers - like Qwest and XO Communications. Our real “right-to-win” as a Multi-Network Operator is that we integrate multiple carriers and technologies together to create customized solutions for each customer. Many of our large clients use us because we can provision, manage, and maintain those circuits more efficiently than they can. There is a very large and growing market opportunity for Multi-Network Operators who can put together these solutions for both large enterprise accounts and channel customers.”
CEOCFO: Is it a superior technology or a superior organization; what accounts for the ability to be so successful?
Mr. Calder: “A little of both. First, as a Multi-Network Operator, we leverage all available technologies - broadband fiber, wireless, or satellite connectivity, where individual carriers generally invest in and are committed to particular technologies, regardless of what is best for the customer. Second, since we do not have an investment in any particular network, we have the freedom to focus on the customer needs. As previously mentioned, our 800-plus global carrier relationships allow us to find the best solution amongst them.”
CEOCFO: How do you reach your potential customers?
Mr. Calder: “We have a large global direct sales force in the United States and in Europe, principally in England, Germany, and France. We also have a solid base of channel customers, wholesale carriers, and large systems integrators - who buy our service as part of a broader solution that they are providing. Over the last year, we significantly increased the size of our sales force to meet our growing client demands.”
CEOCFO: Do you see geographic expansion with your sales force into newer areas where you do not have a presence?
Mr. Calder: “We have a direct sales force in four of the six largest GDP-producing countries, and our customers require service to countries all over the world, so we feel sufficiently positioned in this regard. Although we do not have any immediate plans to expand beyond these markets, one potential area of sales force expansion is the Far East.”
CEOCFO: What are the new services you will be offering and will you be targeting your current customers? Do you expect to bring new customers into the fold through these services?
Mr. Calder: “We have been very focused on the following services in the beginning of 2008 – First, GTT Hub Service, as we mentioned earlier. Second, Carrier Ethernet, a high capacity wide-area network offering that has become a large and growing part of the worldwide telecom product set. Third, we launched Managed Network Services in which we monitor and manage the health and welfare of our customers circuits and network devices. We have already seen some sales lift from these product launches, from both existing and new customers.”
CEOCFO: Are companies looking for Managed Network Services or do they need convincing?
Mr. Calder: “It depends on the client and their level of sophistication. Some of our largest clients provide it themselves where others have decided to outsource this increasingly complex part of their business. Many new clients share that they like our one-two punch of customized network solutions and Managed Network Services. There are always accounts that will want to do it themselves, but there are a growing number of accounts that see this as a way to outsource something that is not their core competency.”
CEOCFO: Do you have plans for additional new services coming up?
Mr. Calder: “Yes, we do. We are particularly excited about wireless services. Today we provide some wireless service in the form of global roaming for PCs. As the enterprise wireless market continues to grow, GTT has an opportunity to extend its Multi-Network Operator value proposition into the enterprise wireless space.”
CEOCFO: What is the financial picture of the company?
Mr. Welch: “We are on solid financial footing, particularly when you look at the company’s financial position at the time of the merger. Since that time, we have improved our revenue growth, reduced our working capital imbalance, restructured much of our debt, raised additional cash and established a multi-million dollar credit facility. First, our year over year revenue growth for 2007 was 10.7% and our fourth quarter revenue growth was 14.7%. This growth was driven principally by the performance of our global sales operations. Second, we improved EBITDA profitability of the company. Prior to the acquisition, the companies were in a negative EBITDA position. In 2007, we reported nearly $400,000 positive EBITDA for the second half of the year and we see a clear path to yearlong EBITDA profitability in 2008. Third, we significantly restructured the company balance sheet. Following the merger, the company had over $10 million in debt, a significant portion of which was due in June of 2007, with limited liquidity options. By year-end 2007, we reduced our total debt obligation to $8.8 million through term extension (now due in 2010), and brought over $2 million of new cash into the company. The final piece of the financial puzzle was securing a $2 million credit facility with Silicon Valley Bank. With our newly stabilized balance sheet, we do not feel that we need additional cash to fund the business. We are very pleased with our financial condition.”
CEOCFO: What is the strategy in the next two or three years?
Mr. Calder: “Strategy one is to organically grow the business at a faster rate. We think we have the required elements – the right infrastructure, the right selling organization, the correct financial organization, and the needed financial strength - to do that. Prior to when Kevin and I joined GTT, the original strategy was to look for acquisitions. At this point, we will look at future acquisitions more opportunistically, focusing on companies similar to ours, or with complementary product lines. Still, our first obligation to the company and our shareholder center is to grow this business profitably moving forward.”
CEOCFO: Why should potential investors look at the company?
“Our recently completed restructuring has put us on a profitable growth path
and we see faster growth opportunity moving forward. We are playing in a
large and growing global telecom market, with lots of customer demand for
our products and services. Multi-Network Operators like GTT who can put
together ‘best-fit’ solution using multiple carriers and technologies will
continue to be in demand. We continue to win business from both our embedded
customer base and new customers. Lastly, by adding new products like GTT Hub
Service and Managed Network Services, and expanding into enterprise wireless
and other service areas, we see the opportunity for both organic and
inorganic growth to bring value to our customers and profitably for
“First, as a Multi-Network Operator, we leverage all available technologies - broadband fiber, wireless, or satellite connectivity, where individual carriers generally invest in and are committed to particular technologies, regardless of what is best for the customer. Second, since we do not have an investment in any particular network, we have the freedom to focus on the customer needs. As previously mentioned, our 800-plus global carrier relationships allow us to find the best solution amongst them.” - Richard D. Calder, Jr.
recommendation on stocks based on the interviews published.