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Pacnet Announces New Strategic Plan to Transform Its Business
SINGAPORE, Oct 14, 2012 (MARKETWIRE via COMTEX) --
Pacnet ("Pacnet" or "the Company"), a leading provider of integrated
network and technology solutions in Asia Pacific, today announced
that recently appointed Chief Executive Officer and highly regarded
industry executive Mr. Carl Grivner and the Board of Directors have
developed a proactive strategic plan to fast-track the transformation
of the Company, create a more nimble and competitive organization,
and enter a new phase of accelerated growth and profitability.
Following an extensive review of many options, the Company is
commencing a series of initiatives that will have a transformative
impact and position Pacnet to address key objectives and priorities.
These include focusing exclusively on high margin core businesses,
upgrading offerings, streamlining operations, and reducing costs.
Additionally, Pacnet will focus its expansion efforts on markets with
the greatest opportunities and invest in the future through more
technology and network upgrades, new data centers, and a
comprehensive suite of managed services. To efficiently carry out
these initiatives and maximize their benefits, Pacnet will leverage
its well-known brand, valuable set of assets, solid customer
relationships, and strong underlying business.
"Our aim is to become the leading provider of network and technology
solutions for enterprise and carrier customers in Asia Pacific,"
stated Mr. Carl Grivner, Chief Executive Officer. "We currently have
an unquestionable market leading position and Pacnet is a key gateway
into Asia Pacific's vibrant markets. However, in order to maximize
the many current market opportunities, better serve our customers,
stay ahead of competition, and build the strongest Pacnet possible,
we are planning to implement a number of transformation initiatives.
We intend to leverage and build on our very strong foundation but we
will also make important and necessary changes that will refine our
business model and enable Pacnet to enter a new phase of accelerated
growth and improved profitability."
Overview of the Transformation Initiatives
While there were several
important initiatives already underway, the Company's new strategic
plan is officially launching in the fourth quarter of 2012. The plan
comprises five key strategies including:
1) Focus exclusively on carrier and enterprise customers.
Fine-tuning its commercial approach will enable the Company to
deliver better and more targeted solutions to its carrier and
enterprise customers, who include some of the world's leading content
providers and e-commerce firms. This will also translate into greater
sales of higher margin business for Pacnet.
2) Leverage existing unrivaled data center capacity and introduce
additional managed services for customers.
The Company will look to deliver "IT as a service" by introducing a
wide range of new value added services such as full data management,
virtual hosting, and security products.
3) Expand the capabilities and reach of Pacnet's network in China.
In line with its intention to focus expansion efforts on markets with
the greatest opportunities, Pacnet will commit more capital and
resources to its China business. The Company will work to more fully
leverage its existing network and licenses in China, including its
domestic IP VPN license.
4) Implement an industry leading operating model that enables
superior execution and the delivery of an unrivaled customer
experience.
The Company will elevate operating standards and will create industry
leading systems and processes that will enable consistent and
efficient execution. Pacnet also commits to a new "Customer Culture"
philosophy such that all efforts will be geared towards delivering
the very best solutions and superior service to customers.
5) Rationalize the business to free capital for more value added
services.
Pacnet will fine-tune its strategic focus and streamline the
organization in order to strengthen the business for the long-term.
To achieve this, the Company will divest certain parts of its
business that are no longer considered core and in the fourth quarter
it will exit commoditized businesses such as the residential internet
service and wholesale voice segments. This will enable the Company to
focus exclusively on building out high margin value added services
offerings. Moreover, Pacnet will streamline the underlying operations
to create an operating model that is customized around the most
important offerings. As part of this, the Company will reduce its
global workforce in non-strategic areas and by a total of
approximately 30%, thereby lowering annual expenses by approximately
US$30mm.
The planned transformation initiatives will result in a number of
specific benefits to Pacnet's overall business and this will start to
take effect immediately and continue over the next three years.
Pacnet will be able to better serve its customers, it expects that
revenue will grow much faster than previously, and the business will
have a leaner cost structure as approximately US$30mm in annual
expense will be removed. A portion of the resulting capital resources
will be re-invested back into the business to further the many
planned initiatives.
The Company and its shareholders are confident that it has ample
liquidity to fund all of the capital expenditures related to
executing the new strategies without jeopardizing the strength of the
balance sheet. Further, many of the planned changes will bolster the
Company's cash generation capacity and give Pacnet more financial
flexibility. The Company also has the backing of a high quality
investor group and strong lines of credit with banking partners.
Pacnet's New Organizational Model and Leadership Team
The New
Organizational Model
In support of the planned initiatives, Pacnet
has realigned and refined its operating model. The Company is
restructuring the sales organization to create two separate divisions
-- Enterprise Markets and Carrier Services. This is designed to drive
revenue in two primary areas and provide solutions to two very unique
sets of customers with specific product, pricing, service, and
support needs.
The creation of a dedicated Managed Services Unit will channel
investment towards enhancing Pacnet's comprehensive suite of
state-of-the-art products and services. A dedicated focus on driving
innovation and product development, building on the Company's data
center platform, will further differentiate Pacnet from its peers and
strengthen its position as a leading gateway into Asia Pacific's
digital marketplace.
Supporting the team's renewed commitment to customer experience will
be cross-functional operations and financial teams that will ensure
the delivery of superior execution in customer service, financial
management, and operating systems.
The New Leadership Team
One of most important recent actions has
been to ensure the senior leadership team consists of best-in-class
talent with the most current technology and telecommunications
industry expertise available. Mr. Grivner has therefore redesigned
the composition and structure of Pacnet's senior leadership team,
recruiting key industry experts, promoting various existing senior
leaders, and redeploying and redesigning the responsibilities of
certain senior managers to maximize their talent.
As separately announced today, Pacnet's senior team has been
bolstered by the landmark hires of some of the most highly regarded
experts in the industry, as well as important internal moves, which
complement the strategic initiatives now being executed.
-- Chief Financial Officer Brett Lay, who has been with Pacnet for six
years, will play a critical role in setting and helping the Company
adhere to financial targets that the business is seeking to meet.
-- Jim Fagan has joined the Company as President of Managed Services. Mr.
Fagan will drive the build-out of this new managed services division
which will bring an expanded suite of new services to benefit
customers.
-- Recently appointed Cardi Prinzi will lead the newly defined Enterprise
Markets division. Mr. Prinzi will source opportunities with
enterprises looking to connect into and across the Asia Pacific region
and drive sales in this division.
-- John Garrett, most recently Pacnet's Managing Director of Southeast
Asia, will lead the Carrier Services division. Mr. Garrett will source
opportunities with carrier service providers looking to connect into
and across the Asia Pacific region and drive sales in this division.
-- Andy Lumsden has returned to Pacnet to assume the role of Chief
Technology Officer. Mr. Lumsden will be responsible for maintaining
Pacnet's technology leadership and assisting with developing the next
generation of network platforms.
-- Grace Guang, who has been a member of Pacnet's management team for
seven years, will take on the additional position of Chief of Staff,
in addition to her current role as General Counsel. Ms. Guang will
play a central role in driving the new strategies forward,
particularly in relation to growth plans for China.
-- Head of Human Resources Anne Adam has held management positions at
Pacnet for 11 years. Ms. Adam will play an important role in ensuring
the internal transformation process is smooth and she will continue to
drive all human capital initiatives going forward.
Mr. Grivner concluded, "We understand and appreciate that some of the
changes we are making may be difficult but they are necessary to
build a stronger Pacnet. Once we have rationalized our operations and
completed the planned refinements, we will be better positioned to
roll out our new strategy. We also now have in place a new and
extremely qualified management team to execute what is planned and we
and our shareholders are excited by what this will mean for the
business. Our streamlined operating model will be much more focused,
each specific business area will have a very strong leader, and we
will be singularly focused on effectively serving our diverse
customers as their businesses grow and evolve in the Asia Pacific
region."
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About Pacnet
Pacnet is a leading provider of integrated network services and data
center platforms for enterprise and carrier customers in Asia
Pacific, delivering high-performance technology solutions over the
region's most extensive high-capacity submarine cable systems.
Ownership of over 46,000 km of fiber connected to its regional data
centers gives Pacnet unparalleled connectivity to major business
centers throughout the Asia Pacific region. Its complete set of
solutions for managed data, private line, data center services, and
content delivery, combined with its expertise in serving Asia
Pacific, have made Pacnet a trusted services provider for large
businesses worldwide, including many of the Fortune 1000. Pacnet is
headquartered in Hong Kong and Singapore, with offices in all key
markets in Asia and North America. For more information, please
visit: www.pacnet.com.
For more information, please contact:
FTI Consulting
Tom Evrard
Tel: 65 9107 6123
Email: Email Contact
Daniel DelRe
Tel: 852 9623 5080
Email: Email Contact
SOURCE: Pacnet
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