TMNG Global Advises A Major International Bank Planning To Spin Off A Communications Services Provider

Challenge

A major international bank had built a worldwide telecom network to provide state-of-the-art interoffice communications services as well as secure investment transactions. Keeping that network technologically current, maintaining it, and expanding it, especially in light of mergers and acquisitions with other banks and investment institutions, were ever-increasing drains on internal resources and a growing overhead cost. The client was considering consolidating all network activities in a single division, and potentially, spinning it off as a stand-alone company, providing secure telecom services to the banking and investment industry. The client would then outsource all of its telecom needs to this new entity. The client needed help understanding how to transition from being a private service provider to a public one, including changes and requirements for a new network structure, systems, processes, pricing, and costs.

TMNG Global Solution

The TMNG Global team took a multi-phased approach to the problem. The first was to “block out” what the new company would look like and to compare that to the current state. A transition plan would then be developed, providing an estimate of time and money required. After approval of the plan, the transition would be executed in three stages:

• First, all telecom related activities would be consolidated into a stand-alone division with its own budget
• Second, the changes necessary to become a public carrier would be implemented
• Third, the division would be spun off as a separate public telecom company to which the client would outsource all its telecom needs

The first step was to determine all the things that needed to be done and then to prioritize them on the basis of lead time required and, even more importantly, feasibility. In other words, if certain critical issues could not be resolved, for example internal approval and financing, the project could not go forward. A project team was developed which incorporated both consultants and employees. The areas initially addressed were: network assets, people, organization, processes, architecture, security, licensing, accounting, services, and, of course costs and estimated revenues.

We drilled down into each area. For example, a survey was undertaken to look at all the network POPs to determine the equipment, access, room for expansion, etc. The security people were concerned about maintaining the security of transactions over a shared network and recommended changes in the network structure, equipment, and software. The processes were enumerated and consolidated. We then made recommendations as to to the changes needed to the ordering and provisioning processes, since ordering services internally would be handled and accounted for quite differently from those on an outsourced basis. In this fashion, TMNG determined changes to the network, physical space, processes, and accounting and estimated costs for the transition.

Benefits to the Client

The client’s corporate environment changed when it entered into a very large merger. As a result, the client decided to place a hold on the project after the first phase of consolidation of all telecom-related activities into a new division. However, this interim achievement was of considerable benefit to the client in that costs can be more closely controlled and telecom services better managed. Additionally, the client is now well positioned to turn this new organization into a profit center, first internally, and eventually, by offering services outside the company.