The crazy world of Telco power struggles

Energis was formed in the mid 90s as the third carrier to take on the BT & Mercury Duopoly. Its unique selling point was that the network mirrored the national grid- the fibre optic cables are wrapped around the earth wire- the one at the top that links the pylons together.

I actually spent half a day working for Energis when I was at Nortel, I had a trip down to their main Network Operations Centre opposite the redundant Bankside Power Station (now Tate Modern). Their problem was that the network switching infrastructure was in place but they had hit some contractual hitches with rolling out the fibre, in the form of Wayleaves, a Telco construct for compensatory payment for utilising and getting access to land for running cabling etc. (the obligation to cooperate is enshrined in statute, an explanation of Wayleaves & Easements can be found here (towards the bottom). It seemed that the existing Wayleaves with farmers that covered power did not include any form of telemetry above and beyond that required to support the electricity network so haggling was required.

Whilst it was being sorted out by the lawyers, the launch date loomed, so to meet their pre-order committments, they were building a smaller scale network- using private circuits from BT & Mercury as a stop-gap measure!

My job only lasted half a day as I was "loaned" the the Energis project by a friendly Director with the best of intentions as a troubleshooter, but all they actually needed was an administrator.

Energis went down the pan a couple of years ago and managed to survive after a rather dodgy pseudo-adrministrative semi-receivership where bankers bailed the Company out, but at the expense of the shareholders. It has kept going but has been somewhat under-capitalised.

It recently emerged that Cable & Wireless (the owner of Mercury) had made a bid which was being considered but Energis were holding out for more. Today, th deadline for the negotiations, the sector was stunned to hear that Thus (the former Scottish Telecom) put in a counter-bid. Energis turned it down somewhat quickly as it was for £600m cash & £200m shares, when the total net worth of Thus is only thought to be £200m (& C&W had offered more cash).

The rumours are that C&W have been successful. I know staff in all three Companies involved so it will be interesting to see how the market develops.

I wouldn't personally invest in a Telco, they are going to blink one day and the ISPs will overtake them, already Tiscali are shaking up the Business DSL world with more powerful, more flexible offerings. It is a dilemma for BT because they will lose business from their legacy products (i.e. leased line access either as direct Private Circuits or links into Frame/ATM services), so they are walking the thin line between losing customers to other Operators and keeping them but on much less margin.

An interesting take on this can be found on my website here which i have mentioned previously in a previous posting.