Annual report 2008

Annual report 2008
Annual report 2008
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Table of contents
1 Completel at a glance
3
2 History of the Company
5
3 Market and activities
3.1 Why did Completel choose to develop optic fiber
3.2 A comprehensive service offer on complementary networks for businesses
3.3 Completel’s products
3.4 Wholesales services for carriers and Internet Service Providers
3.5 Clients
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15
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4 B3G acquisition
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5 Strategy and financial results
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6 Biographies of key managers
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7 Information on shareholders
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8 Contacts
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1
Completel at a glance
Completel is the second largest challenger of France Telecom in the French Business to
Business telecommunication market. After France Telecom, Completel has the most extensive fiber network for businesses, reaching 4,500 sites with fiber. Completel also has
one of the widest-ranging DSL networks, covering 110 cities.
Completel was established in January 1998 to take advantage of the opportunities arising
from the progressive liberalisation of the European telecom markets. Since 2002, it has
focused its operations in France, more particularly on the French Business to Business
market. In 2006, it successfully executed an ambitious expansion program, rolling out
both a new national fiber backbone and a DSL network with approximately 1,000 NRAs.
Completel’s strategy is to address the telecom needs of corporate customers, offering
them a full range of voice and data telecom services, via the direct connection of customers’ sites on its unique combination of fiber and DSL networks.
Completel also serves the wholesale market, offering traffic termination services, as well
as connection of end customers to its own fiber and DSL networks.
In 2006, Completel entered a new segment - the residential wholesale market - by developing Triple Play residential services for Darty. Completel’s network is the third largest DSL network in France, in terms of collocation sites connected and residential lines
passed.
Key figures
#2 alternative carrier with its own local fiber network in the 9 largest
cities
150 metro areas in DSL, 50 in fiber
2,971 km of local fiber based access network
10,000 km of national backbone
National backbone capacity of 40/80 lambdas
€357m revenue in 2008
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Completel network
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2
History of the company
In its 10 years of existence, Completel has developed the leading alternative access
network for the corporate sector and the 3rd DSL network in France.
1998
-- Creation of Completel Europe NV and France, German ans UK subsidiaries
-- Construction of the urban network in optic fiber
-- Acquisition of the first operating licences
1999
-- Launch of operations in Paris, Lyon, Lille and Marseille
2000
-- Completel IPO on primary French market and NASDAQ
-- Launch in Grenoble, Toulouse and Nice/Sophia-Antipolis
-- Launch of the first LAN to LAN Ethernet offer
2001
-- Acquisition of Estel, a telecommunication operator in Alsace
-- Launch in Nantes
-- Launch of two national centres in Paris and Lyon
-- Launch of the LAN to LAN Ethernet town to town offer
2002
-- Delisting from NASDAQ
-- Operating focus in France with the sale of the German and UK subsidiaries
-- Launch of the VPN IP offer
-- 1st operator in France on the Ethernet network with 400 sites connected with LAN
to LAN Ethernet
-- 1000th site directly connected to the network
2003
-- Bilateral agreement on traffic collection and termination with Cable&Wireless
-- 2000th site connected to the network
-- Launch of the Completude offer, the first market offer “Phone + Internet” in direct
connection with a high speed flow, for SMEs
2004
-- Extension of the Parisian region network
-- Exclusive parnership with ArcheOmneticaGroup, the leading French data network
integrator, to serve corporate data needs
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2005
-- Launch of Completel nation-wide expansion plan to become the only alternative
operator with both a large metropolitan fiber access network and a comprehensive
DSL coverage of French businesses
2006
-- 3rd largest DSL network
-- Confirmed leadership position on Very High Speed services (LAN to LAN services)
-- Launch of a dedicated SME offer on DSL line
2007
-- Deployment of the Darty box
-- Revamping of Completude: a convergent offer with Internet, home and mobile phone, through
a partnership with Bouygues Telecom Enterprises
-- Acquisition by Altice and Cinven of Completel
2008
-- Carlyle becomes a reference shareholder
alongside Altice and Cinven
-- Restructuration and industrialization of the
installation platform
-- Acquisition of B3G
-- New CEO Pierre Danon and new CFO Julien Elmaleh
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3
Market and activities
3.1 Why did Completel choose to develop
optic fiber
Optic fiber uses light waves to transport information. It provides for an almost unlimited and evolving capacity a great transmission quality and is
nearly isolated from electrical and magnetic interferences.
The Completel metropolitan network is entirely
made of optic fiber, and use SDH transportation
technologies (Synchronous Digital Hierarchy),
Ethernet and DWDM (Dense Wavelength Division Multiplexing). Voice commutation and Ethernet commutation of level 2 and level 3 routing rely
upon these technologies. Direct fiber connections
to the site offers customers the benefit of flexible
technology which can be tailored to their voice
and data requirement. The main proven advantages of optic fiber over other technologies such as
DSL are unmatched levels of bandwidth capacity
and reliability of service.
Completel offers its clients
a minimum capacity of 4 E1
(2Mbps/s) + 1 Ethernet plug
of 10 or 100Mbps, e.g. 4 times
the necessary capacity for a
30 phone acesses system and
a permanent 2Mbits/sec internet access.
Some clients already require 1
or 2 Gbits/sec. connections
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3.2 A comprehensive service offer on
complementary networks for businesses
-- EDF
-- Auchan
-- Ministère de l’Intérieur
-- Ministère de la Défense
-- Etc...
-- HP
-- Castorama
-- Air France
-- Société Générale
-- Etc...
-- Bouygues Telecom
-- Darty
-- Verizon
-- Etc...
-- Voice over Fibre/DSL
-- Multisite voice
-- Preselection
-- LAN to LAN
-- IP VPN
-- Internet
-- Hosting
-- DSL 3-play residential
access
-- Traffic termination
-- Traffic collocation
-- High Capacity Links
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a. Direct connection based on complementary fiber and DSL access
Completel believes that owning a direct connection to the customer sites delivers longterm competitive advantages such as:
- Higher revenue per customer
- Controlled and oversized bandwidth from the initial connection
- Higher degree of customer loyalty
Combination of fiber to the site connection...
The company provides direct fiber connection to its customers’ sites located within the
reach of its metropolitan networks. At year-end 2008, Completel has connected 4,500
sites to its metropolitan fiber access networks, confirming its position of France’s leading
alternative carrier in fiber sites in service.
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...DSL access
Completel is using both fiber and DSL as complementary access technologies to address
its customers’ needs, depending upon the bandwidth and security requirements of their
sites.
Generally Completel connects its customers’ main and/or critical sites with fibre, while it
usually connects DSL lines to the secondary sites of large customers, as well as SMEs in
the areas covered by its DSL network.
Completel believes that the direct connection based on complementary fibre and DSL
access is the best technical response to customer needs :
- bandwidth requirements
- technological and geographical complementarities
- end-to-end control of quality of service
The complementarities of optic fiber and DSL-based solutions give Completel a unique
position on the corporate market. Its competitors may offer similar solutions, but their fibre
networks are less dense than Completel’s and usually do not have sufficient geographical
coverage.
This approach allows Completel to:
- Offer a viable alternative to the incumbent, and
- Capture all telecom spends of its customers Annual report 2008
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In 2008, the Company accelerated the use of DSL lines and doubled the number of corporate sites connected with DSL. The proportion of DSL connected sites fibre connected
sites continued to grow, as Completel increasingly sold its DSL services to secondary
sites of existing fiber connected customers, and addressed new customers with national
needs.
Customer’s secondary sites outside of Completel’s DSL network reach are connected
through DSL lines or leased lines from France Telecom or other operators.
Example of a company data network (in optic fiber and DSL):
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b. Fiber connection for Gigabit Ethernet services
Completel believes that its local fibre access network constitutes a major strength in differentiating its services, such as LAN-to-LAN, SAN-to-SAN, and Gigabit Ethernet services,
to meet bandwidth needs of multi-site medium and large companies. Only an operator
with significant fibre coverage – locally and nationally – can offer such Very High Speed
services (over 10Mb/s) as well as control direct optic fibre connection of customer sites
and end-to-end network supervision.
Completel was the first French operator to offer services such as LAN-to-LAN based on
Ethernet technology, which is the standard technology for corporate data networks. With
over 4,500 sites connected at the end of 2008, Completel considers that it remains the
leading alternative operator in this market segment.
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3.3 Completel’s products
a. Fixed voice
Completel’s offering covers businesses entire fixed voice needs, which encompass
outgoing and incoming calls, personalized routing and reception services.
Completel proposes a range of evolved functionalities to optimize the client operations:
- Multiple work sites routing
- Routing according to geographical origin
- Calendar routing
- Interactive vocal answering machine
- Real time statistics generator
- Routing management and parameter setting through the Extranet
For companies with multiple worksites, Completel proposes a specific price for internal
calls and adapts both the structure of the bill and the traffic reports to the client’s wishes
(consolidated bill or per site).
b. Fixed data
Completel’s Internet solutions fit customers expectations in terms of network reliability,
data housing security, and connection quality.
Completel owns its IP network and also has a « peering » with other operators and Internet providers present in France, as well as a direct interconnection with major international players, in order to reach every company requiring its services.
c. Worksites Connection and Housing
Businesses face a real challenge in their information systems requirements. A secured
sharing of information between collaborators has become critical for an efficient commercial and operational organization.
Therefore, Completel offers a complete range of services that connects work sites through secured Internet and database housing.
A company can connect its different work sites and its affiliates through different networks
with LAN to LAN Ethernet or with IP (IP VPN) – thus benefiting from High Speed Internet
access combined with safe solutions for the housing system and easily manageable selling platforms.
Completel housing solutions are backed by a High Flow telecom structure to allow companies to improve the availability of their applications.
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d. A packaged offer for SMES
Completel has a packaged offering for SMEs – Completude – since 2003, which regroups
fixed voice, data and additional services.
The Home / Mobile Phone Completude offer for SMEs was launched in October 2007,
combining mobile phone services from Bouygues Telecom Enterprises and fixed voice
and data services from Completel. This offer is a step further to better answer the SMEs
need for an easier communications and budget management tool .
Completel installs the devices, takes care of the cancellation of the former phone subscriptions by calling directly the operator and delivers the functions: Internet services, mobile handsets on site. Both phone numbers and Internet email addresses remain the
same. One customer service platform answers the client’s needs, with only one speaker,
one contract and one bill.
Completel provides website housing, personalized web domain name, as well as an online management that allows the client to access its detailed phone bill, traffic report analysis and service settings. An evolved mailing basis allows safe access, at any time, to the
client’s mailbox. Through Fax to Mail, the client can receive faxes directly in its mailbox.
Internal communications are unlimited, 24/7.
In July 2007, Completel was ranked 1st for Fixed Data and 2nd on Fixed Voice by “le
Journal des Telecoms” in its annual Grand Prix de la Distribution.
Completude offer
-- internal unlimited mobile and home phone
communications
-- one bill
-- access to a large panel of functions : internet services, mobile phone and landline
phone
e. Installation platform restructuring
H1 2008 saw an increase in the installation backlog. The management ran a detailed
diagnosis of the issue and led a significant restructuring effort of the whole installation
platform through industrialization, processes design and increased qualitative staffing.
The installation rate drastically increased at the end of 2008 and backlog has started to
decrease.
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3.4 Wholesales services for carriers and
Internet Service Providers
Since 2006, Completel has extended its wholesale services portfolio, benefiting from its
extended network coverage and product development. Completel now offers carriers and
Internet Providers the following services:
-- DSL-based Triple Play residential services
-- DSL-based Double Play corporate services
-- Fibre and DSL access: Very High and High capacity metropolitan links to connect
their end customers Collocation of their equipment
-- Traffic termination
In Q4 2006, Darty launched its own brand on the DSL market, trusting Completel’s network
and services. As of December 2008 Darty had c. 200,000 subscribers.
Darty Box is ranked 2nd DSL operator by 01net magazine, which highlights its competitive
offer and its quality client service.
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3.5 Clients
Completel mainly serves medium and large companies since the Company has historically focused on addressing with fiber access the needs of large and critical sites of multisites corporate customers, located within a 500-meter range of its metropolitan networks.
Completel had solidly established its presence on this market segment, but was however
lacking the geographical coerage to economically serve the remote sites of its customers,
located outside the 9 regions historically covered.
With its expanded network footprint covering 110 metropolitan areas, Completel is now
able to up-sell to its existing medium and large of their secondary sites accross France,
leveraging on the complementary access of fiber and DSL.
Thanks to its extented footprint and the combination of its DSL and fiber networks ,Completel is now addressing the wholesale market on a national basis, providing French and
foreign operators with a viable alternative source of supply to France Telecom and Neuf
Cegetel, the two main providers on this market segment.
In 2008, more than 4,500 enterprises have fully or partly trusted Completel’s telecom
services by switching to a direct connection to the Completel network.
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4
B3G acquisition
Transaction overview
Completel acquired B3G from AXA Private Equity, Orkos Capital (French private equity
company owned by BNP Paribas), Partech International (US based venture capital firm),
B3G founder and management. The transaction was completed on March 30th, 2009.
Business overview
B3G is a B2B telecom provider specialised in telephony services through 3 types of activities:
-- Trading of telephony minutes between operators
-- Private label VoIP for operators
-- Telephony access installer and provider for SMEs, with star product IP Centrex
B3G, which employs around 90 people, was in financial difficulties since August 2008 and
was being monitored by the Commercial Court of Paris.
Strategy going forward
The management views B3G as a strategic platform to cross-sell both Companies products – especially Completude and IP-Centrex – and capitalize on B3G staff demonstrated skills. B3G also has a strong small SMEs clients network, a segment that Completel
has not yet fully developed and that will therefore be specifically targeted.
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5
Strategy and financial results
Enhance the Offering
The recent development of its nationwide DSL network has enriched Completel’s offer,
enabling Completel to offer new services such as VoIP and Internet over DSL solutions
or wholesale triple play residential solutions. The partnership recently signed with Bouygues Telecom also enables Completel to enlarge its services with a new fixed/mobile
solution and B3G acquisition adds the IP Centrex technology in Completel’s portfolio.
Enlarge the Customer Base
The Fibre/DSL network has enlarged Completel commercial potential to 60% of SMEs
and 85% of medium and large companies, while lowering connection costs.
Improve the commercial position
Completel is restructuring its commercial segmentation to provide enhanced value proposition vs. size and needs of its clients.
Partnership with Numericable
Leverage Numericable fiber network for its own clients and provide specific services to
Numericable to facilitate its white label and wholesale strategy.
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Biographies of key managers
Pierre Danon (CEO) – 53 years old
-- Pierre Danon joined Completel in September 2008
-- Previously, he was chairman of Eircom, Ireland’s leading telecoms operator since
2006 and senior adviser to JP Morgan since 2005. Until March 2008 he was also
non executive Chaiman of Emap Plc
-- He is a Civil Engineer from Ecole Nationale des Ponts et Chaussées (1978)
Julien Elmaleh (CFO) – 35 years old
-- Julien Elmaleh joined Completel in June 2008
-- He previously spent 10 years with Rothschild & Cie in Paris and New York
-- Julien Elmaleh graduated from ESCP
Thierry Podolak (COO) – 42 years old
-- Thierry Podolak joined Completel in 2000 as Director of Business Development. He
became General Deputy Manager in 2006 and COO in 2008
-- He started his career with Alcatel Group
-- Thierry Podolak graduated from Polytechnique and ENST Paris
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7
Information on shareholders
About Altice
Altice is run by an experienced management team of professionals, led by French cable
entrepreneur Patrick Drahi, who entered the French cable market early and has since
built a track-record of superior business achievements. Since its inception at the end of
2002, Altice has completed several cable acquisitions in the French and Benelux markets:
(i) the purchase of three regional cable companies in Alsace (EstVidéo.com, December
2002), Brussels (Coditel Brabant, November 2003) and Luxemburg (Coditel Luxembourg,
November 2003), formerly know as Altice One, (ii) the purchase, together with Cinven,
of France Telecom Câble from France Telecom, NC Numericable from Canal+/Vivendi
Universal and TDF Cable from TDF, which created Ypso in March 2005, (iii) the entry of
Cinven into Altice One capital in November 2005, (iv) the acquisition of UPC-Noos from
Liberty Global in July 2006 (with Cinven), and (v) the acquisition of Completel in November 2007.
About Carlyle
The Carlyle Group (www.carlyle.com) is one of the world’s largest private equity firms,
with more than US$ 84.5 bn under management. With 64 funds across four investment
disciplines (buyouts, venture & growth capital, real estate and leveraged finance), Carlyle
combines global vision with local insight, relying on a strong team of 497 investment professionals operating out of offices in 20 countries to cover opportunities in North America,
Europe (including France), Asia, Australia, the Middle East/North Africa and Latin America. In the aggregate, Carlyle portfolio companies have more than US$ 109 bn in revenue
and employ more than 415,000 people around the world.
Carlyle focuses on sectors in which it has demonstrated expertise : aerospace, automotive & transportation, consumer & retail, energy & power, financial services, healthcare,
industrial, infrastructure, real estate, technology & business services and telecommunications & media. Carlyle’s financial strength and depth of experience, gained from numerous investments in the TMT space, including Casema, Com Hem, UPC Sweden and
Bredbandsbolaget in Europe make them a strong partner to management and existing
shareholders Altice and Cinven in supporting the companies’ development.
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About Cinven
Cinven is one of Europe’s leading financial sponsors, having invested in buyouts with a
total deal size in excess of €60 billion since 1977. Cinven focuses on six sectors on an
international basis :
- Business Services
- Consumer
- Financial Services
- Healthcare
- Industrials and
- TMT
Recent high profile LBO transactions led solely or jointly by Cinven include Coor (the
leading integrated facilities management (IFM) company in the Nordic region, €536m,
December 2007), USP Hospitales (Spain, leading private healthcare market operator,
€675m, July 2007), Spire Healthcare (UK, third largest provider of private medical services, £1.4bn, June 2007), Gondola (the market leader in the UK casual dining sector,
€1,335m, January 2007), Ziggo (the market leading cable TV operator in the Netherlands,
€5,450m, January 2007), Phadia (Sweden, leading in-vitro allergy and autoimmunity testing systems manufacturer, €1.3bn, November 2006), Avio (Italy, world leading designer,
manufacturer and servicer of subsystems and components for military and commercial jet
engines, €2.6bn, August 2006).
Cinven has a very good understanding of the French TMT sector, having acquired and
consolidated Numericable, France Telecom Cable and TDF Cable in March 2005, EstVideo and Coditel in November 2005, Noos in June 2006 and most recently Completel.
More generally, Cinven has substantial experience of the French buy-out market and of
the French industry having completed a number of transactions in the country, such as
Camaieu (woman fashion retailer, €1.5bn, May 2007), Frans Bonhomme (plastic pipe
distribution, €893 million, December 2005) and Aprovia (professional publishing, €493
million, June 2002), MediMedia (healthcare and communication publishing, €523 million,
June 2002).
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Contacts
Headquarters
Tour Ariane
5, place de la Pyramide
92088 La Défense Cedex
Phone : 01 72 92 20 00
Fax : 01 72 92 20 01
Commercial Information : 0 805 40 50 60
Website
www.completel.fr
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