Three of the competitive industrys most successful CEOs showed during a panel at COMPTEL yesterday that they still feel the pain of the telecom bust and are holding its hard-won lessons close.
Seated on the panel were CEOs Bill Capraro of CIMCO Communications Inc., Dan Caruso of Zayo Bandwidth and Randy Curran of Deltacom. Jerry James, CEO of COMPTEL, moderated the discussion. Caruso said the last few years have been like a roller coaster, but the market has improved, due largely to a heavy dose of level-headedness.
However, the business model, Curran said, is significantly more difficult.
The difference in the environment is enormous, Caruso said. It used to be incredibly intense. But we learned we could slow things down and didnt have to conquer the world overnight. Its okay to be the tortoise and not the hare.
However, this does not mean the companies wont be aggressive. Two of the three CEOs spoke of their planned M&A activity.
We are an active consolidator and we see this as a good time because we have access to money right now, Caruso said. We hope over the next six to 12 months that will allow us to buy good properties at fair prices.
Even Capraro, head of a company not known for its acquisitive nature, said M&A was the way forward. CIMCO has grown organically, but that is not a model that will survive in the long term, so we are working on closing some deals here in the future, he said.
Curran didnt mention his companys acquisition strategy, but did comment on the market in general. Financing will be limited. The capital markets are bone dry, but the overall trend will continue in a big way, he said. However, he made the point that the money crunch was due more to the credit market than the telecom space, which he, too, said was strong.
However, Curran said the value proposition for CLECs has to evolve. We have to be something other than cheaper, something that has us reaching out to different markets, he said.
Caruso added that CLECs never got around to building the fundamental business skills necessary for sustained businesses because of the frenzied pace of the market they started in.
Even today, Capraro said, we have so many companies that now are financially sound, but we have to measure ourselves every day.
Another thing that has changed for CLECs is their corporate cultures. Caruso said that he didnt always think corporate culture was important. No more. My stance has changed dramatically,” said Caruso. ”Now culture is the most important thing. Its what makes employees want to get up in the morning.
All panelists said the regulatory landscape was positive overall. However, Curran said, Any sense of confidence would be misplaced. We should feel good about what we are doing, but confidence would be a mistake.