It was a quiet day in the office today, a few valued customers called in for a chat and then on the subject of communications, 2 interesting snippets flew across my desk. Firstly the news that Avaya was filing for Chapter 11. I was shocked by this. Avaya have always seemed to me to be a solid company with a sound product range and a good solid client base. I can only speculate about what went wrong here.
Then within a few minutes of ruminating over this news over a cuppa and a choccy digestive BT then declare that their Chief of Continental Europe is set to depart after allegations of “naughties”. Earnings and results had been overstated by over £500 million! This is overstatement on the scale of the Tesco debacle from a few years back. It gets worse for BT as their current debt pile is about £9.8 Billion and then they have a pension deficit of about £9 Billion. That is a lot of cash.
I spent nearly 20 years in and out of the Telecoms industry and have always had a lot of time for it and some of the people and personalities within it. Indeed I remember where I was on the day when Worldcom spectacularly fell from grace in June 2002! More about that another time!
These businesses are very complex international concerns and certain parts of these businesses such as pricing and traffic management can almost be regarded as scientific. These parts of the business are generally in the custody of and husbanded by some very clever people who really know their stuff.
It amazes me also that in an industry that is so closely scrutinised by regulators and governments that these situations are allowed to arise and then develop in any way shape or form.
So while today seems not to have created the volume of headlines that the Worldom crash did these events show that the Telecoms industry and the companies within it should never consider themselves too big to fail. I do hope that BT can sort its very large messes out. I would like to see positive light at the end of the tunnel for Avaya too.
So I believe today can be considered a very bad day for the Telecoms industry but to be fair it has seen far worse