John Pluthero: He made pigs fly - but if you're expecting a float at Energis, miracles take a little longer

The Freeserve founder was looking for a new thrill. He explains to Clayton Hirst how he found it again after the technology bubble burst
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John Pluthero slides his business card across the table and grimaces. The chief executive of Energis has no issues with his contact details on the card - it's the picture on the back that he's not so sure about. Above the slogan "Say it like it is" is a flying pig, which forms part of the new brand image of Britain's number three telecoms company.

John Pluthero slides his business card across the table and grimaces. The chief executive of Energis has no issues with his contact details on the card - it's the picture on the back that he's not so sure about. Above the slogan "Say it like it is" is a flying pig, which forms part of the new brand image of Britain's number three telecoms company.

"I have to tell you that this is the one I'm slightly funny about," says Pluthero. "Being brutally honest with our customers - having the courage to point out possible points of failure in our network - are bywords for Energis. But should we have flying pigs to illustrate this? I don't know."

Even if he is a little uneasy with the new branding, it stands as a good metaphor for Energis's fortunes.

The former Freeserve boss joined Energis in September 2002, two months after the company became Britain's biggest casualty of the collapse in the telecoms sector. Once the darling of the FTSE 100, at its peak in 2000 Energis was worth a staggering £13bn when the City rated loss-making technology firms higher than profitable "old economy" businesses. But when the markets came to their senses, the company crashed, leaving shareholders penniless. Nearly £700m in debt, it was plunged into administration and was eventually rescued by its banks.

Pluthero, along with the new Energis chairman, the Conservative MP Archie Norman, faced what critics said was an impossible task: turning Energis around in an industry shackled with huge oversupply and gripped by a price war. Pigs would fly, they said, before Energis would make a profit. But Pluthero has defied his critics. It may not be much, but last month Energis posted earnings before interest and tax of £4m.

"We still have a lot to do, but we are now at a point where we can lift our heads and say, 'We have made some progress. This is the new Energis'."

Energis today bears little resemblance to the company Pluthero inherited. He stripped out layers of middle management and set about changing the culture, controversially declaring that he would hire people from outside the telecoms industry. "We didn't really have time to re-educate some people who were brought up in a different way," he says.

Today, the company may be staffed with a different type of person - more customer focused, according to Pluthero - but the industry is all too familiar.

Energis offers telecoms services to medium and large organisations, such as the BBC, Tesco, Renault and Virgin Group. While much of the economy is improving, telecoms prices are still falling, as competition among operators intensifies. On Wednesday, both Cable & Wireless and Colt Telecom blamed poor trading on the overcrowded market.

Nevertheless, Pluthero is confident that the new Energis, which in the past had been criticised for grabbing market share by offering dirt-cheap rates, is positioned to win new business on the back of the growth in broadband.

This may take time, though. In its results, the company reported revenues of £745m in the year to 31 March, down £25m on the previous year. This, says Pluthero, is due to Energis's traditional dial-up internet business, called "narrowband", declining. This has yet to be fully replaced by new broadband products.

Pluthero is therefore keen to pour cold water on speculation that Energis will be refloated on the stock market at the end of next year. "There is a bunch of options for us - IPO [Initial Public Offering], refinancing and so on. But we told our banks that it would take five to seven years to get in that position. We are two years into that, [the banks] are happy with our progress and we have done absolutely no work in sorting out what we will do when we grow up. If you look at our last set of results, while we are pleased with them, this is not a floatable business."

Energis's banks, which injected £150m of equity in the business and granted favourable interest terms on the company's £700m debt, will be fully repaid, says Pluthero. "I am confident that they will get their money back. Because of the way the deal was structured, then they will get something extra on top of that," he adds.

The chances of the old Energis plc shareholders receiving any money are less certain. Like most fallen companies, Energis has its own army of disgruntled investors aggrieved by the way the company was put into administration. Pluthero has never met the Energis Shareholders Action Group - "it is really nothing to do with us. We have no direct relationship with those shareholders". But he warns that it will be years before they receive any money from Energis. "The banks get the first lot of value that is created, because it is basically their company - their debt. As the business gets more valuable, then other parties get tranches of that value. The old plc bondholders are in there, as are the plc shareholders," he says. "The plc shareholders cut in at £1.4bn. If you look at the multiples in the marketplace today then we are quite a long way off being worth £1.4bn. I would like to think that [the shareholders] will see something, but don't hold your breath - that is years away."

Pluthero joined Energis, he says, to seek a new "thrill". He made his name at Dixons where, during the technology boom, he took an idea to create an internet service provider to his chairman, Sir Stanley Kalms. Freeserve was born and established itself as one of Britain's most successful dot coms. Despite his status as a figurehead for the new economy, Pluthero eschewed the limelight. "I was once - and only once - spotted in a restaurant," he says. "I was horrified, it was like being a minor celebrity."

Associates say that beneath his calm exterior is a driven person. After Freeserve floated on the stock market, it was eventually bought by France's Wanadoo. "Freeserve was an extraordinary experience. One or two of the guys who I set up Freeserve with went on to perfectly good jobs, but suffered post-Freeserve blues - they didn't feel the same buzz. So, I wanted to do something that was incredibly intense."

Two years on, Pluthero claims that he is still buzzing. And nearly halfway through the turnaround plan for Energis, he may be close to proving that pigs really can fly.


Born: 1964 in Chelmsford, Essex

Education: London School of Economics


1990: Director of Chelsea Harbour for P&O

1992: Strategy and planning manager, Holiday Inn Worldwide

1994: Business review director, Dixons

1998: Managing director of Mastercare, part of Dixons group; also founded Freeserve and was appointed chief executive

2002: Chief executive of Energis