Struggling Colt Telecom gets fifth CEO in six years

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The Independent Online

Rakesh Bhasin is the latest Fidelity executive to be given the task of kick-starting revenue growth at Colt Telecom, following the departure of Jean-Yves Charlierfrom the company.

Mr Bhasin has been running KVH , a Tokyo-based network solutions company, for Fidelity since 2001 and will take on the chief executive role at Colt next month. He is Colt's fifth chief executive in six years.

Mr Charlier, also formerly with Fidelity, has been chief executive of Colt for two years and takes credit for improving the company's financial position. During his tenure Colt reduced its debt pile by €1.4bn (£946m) to €250m and recorded its first profit during the third quarter of this year.

"I had a very clear mandate to restore profitability which is now done and dusted. Everyone said that the business was not viable. It is now viable," he said.

Yet revenue growth has proved more challenging. Mr Charlier conceded that when he took over Colt he had an "ambition to grow" but rapid price erosion in the company's legacy voice services hampered his plans.

Colt aims to derive 50 per cent of its revenue from data services over the next two years compared with 43 per cent at the end of September and 39 per cent when Mr Charlier took the helm.

The decision to replace Mr Charlier was agreed between him, the company's board, and Fidelity, Colt's largest shareholder. Mr Charlier will rejoin Fidelity in a strategic advisory role covering various IT and telecoms assets. "It seemed like the right time to go," he said, adding that he sees Colt's next phase of growth being a three-year project.

Andrew Darley, an analyst at KBC Peel Hunt, said the switch at the top represents "an admission of failure". He said that while Mr Charlier had cut costs, revenue growth had failed to materialise. "It's time for a new perspective," he said.

Dan Gardner, an analyst at Bridgewell Securities, said that it was difficult to argue that the transformation at Colt was complete, adding that Mr Bhasin faces a tough task.

"The fact that he represents the fifth CEO in six years highlights the difficulty of delivering a sustained improvement in financial performance," he said.