Comms Vision 2022: TalkTalk drives wholesale transformation following Virtual 1 acquisition

The big opportunity for supply chains in the channel is to become drivers of positive change and partner growth, rather than remain wedded to old-world service functions. Especially in the context of economic challenges where responsiveness, flexibility and innovation will be key to success.

In her Comms Vision (2-4 November, Gleneagles Hotel) keynote TalkTalk Group CEO Tristia Harrison also assessed the impact of current economic volatility and uncertainty on multiple fronts without exemption, and what these macro factors mean to the channel with a particular focus on connectivity supply chain innovation. 

But first she said the relative performance of channel organisations in tough times against other less resilient industry sectors is impressive, praising the channel's key pillar of entrepreneurialism.

"This could be seen as a tough time with a hard hand to play, but with adversity comes an enormous opportunity for us all to step up and show what this extraordinarily resilient sector can do," she stated.

"These are unprecedented times for our industry and society. We've all emerged bleary eyed out of Covid and are now facing different but just as tough economic events. 

"The macro and micro trends, cost of living crisis and high inflation are eroding spending power. People and company incomes are often trailing behind outgoings to a degree we haven't seen for decades. It's a new environment and customers are feeling the pinch."

But the route to success for resellers is to be clear-headed and focused on deploying vital resources such as high grade connectivity for customers, which could help channel partners to outperform their peers, believes Harrison.

"High bandwidth connectivity has never mattered more," she added. "Usage is on the up. People want and need bandwidth and higher speeds and are prepared to pay a little more for something that is essential to their lives."

According to Harrison, the connectivity market, and the broader IT market, are at a major pivot point. "Competitive supply is a reality with dozens of fibre builders building at pace," she commented. "If Government and Ofcom realise that customer take-up in its broadest sense is fundamental and just as important as build, this new environment will unlock greater bandwidth and speed for businesses of all sizes across the UK."

TalkTalk is continuing with efforts to build a resilient channel supply mechanism and to sustain its long-term growth initiatives, which required, for the sake of rapidity, a new acquisition strategy made possible by a take private that restored TalkTalk's entrepreneurial can-do culture rooted in B2B and wholesale.

"It's 18 months since Executive Chairman Charles Dunstone, the board and our private equity partner Tosca and I took the business private," explained Harrison. "The major reason was to give us the space and time to invest in the growth of our wholesale platform serving businesses and consumers.

"The quarterly reporting timetable of a public company is just short-term. Today, happily we are in a long-term phase. We want to grow and invest. We are also investing in FTTP functionality. We spent many years completely integrated into Openreach's systems selling copper services. We are now integrating fully with CityFibre and are investing in scaling alternative networks."

Dislocation from Openreach is a pressing challenge, born out of the requirement to reimagine TalkTalk's channel operating model and deploy the right technology to accelerate change and improve the drive for growth, as well as ensure the transformation is sustainable over time.

By applying its end-to-end supply chain expertise in the altnet space, facilitated by a smart capabilities approach and relationships with certain alternative network providers, TalkTalk aims to create an agile and streamlined channel strategy that responds to the current challenges faced by resellers looking to deliver a sustained fibre-based strategy.

"We were founded originally to drive competition and that remains true," added Harrison. "We have a FTTP network across a range of builders: Openreach is building at scale and we have a long-term agreement with CityFibre, Community Fibre in London and Freedom Fibre in the north west. We are completely agnostic as to builder and will connect with organisations that are well funded with excellent customer service and can build with quality. Competition brings fantastic pricing. It's a fascinating time in this space."

Altnets are becoming more common but Harrison's selective criteria will likely make for a more sustainable advantage. And against this backdrop of supply chain transformation, going private enabled TalkTalk to make important M&A decisions, acquiring smart aligned businesses (and customer bases). 

Earlier this year the company purchased Virtual 1, primarily for its capability in automation and portal experiences, its voice services, SD WAN, cloud, security, colocation etc. Couple that with TalkTalk Group's national scale, its major backhaul investment and tier one critical infrastructure, and you have a more compelling proposition.

Virtual 1 CEO Tom O'Hagan increasingly realised that a direct approach was needed to drive his company's expansion plans, and that doing so through a sale to TalkTalk would bring new opportunities for both businesses and their channel partners.

O'Hagan quantified the benefits of uniting Virtual 1's operations and practices with TalkTalk in his Comms Vision fireside interview. "Virtual 1 is good at automation, APIs and portals, but our network was 300 points of presence," he stated. "We were lacking network scale and TalkTalk has 3,000 points of presence. Combine Virtual 1's capability with TalkTalk's scale and you have something game changing. I got excited about that. Now, Virtual 1's SDN capability is available across the whole TalkTalk network.

"And because we have a national network and RFI, we have an opportunity to aggregate altnets locally utilising the national footprint. It's difficult for resellers to bring those relationships together. We can do that through a single pane of glass, the API set, and importantly we wrap the SDN technology around it. Partners can buy a CityFibre or ITS connection on our network now, and can turn the bandwidth up our down in 40 seconds, whereas it may take 40 working days elsewhere."

O'Hagan also noted that Virtual 1 is developing more thought-provoking innovation, adding: "An end customer portal is in development and will be launched next year, enabling end customers to log-on and make changes themselves seamlessly. We'll give that to the channel to help partners win more business with this USP." 

The Virtual 1 acquisition prompted TalkTalk to revisit its wider strategy which led to a fundamental restructure within the business. Harrison explained: "We've streamlined our wholesale platform into distinct consumer and business divisions. There is a world of difference between the two. For example, the business division has Ethernet and provisioning at scale. In Q2 we took 45 per cent of all the net new Ethernet volume from Openreach."

Being clear about the big bets to win in the future is also about gaining some strategic clarification from a glance into the rear view mirror, and reconnecting with essential roots. 

"TalkTalk Group's founding mission remains the same," added Harrison. "It's 20 years since TalkTalk acquired Opal Telecom to provide affordable easy-to-do-business-with connectivity for homes and businesses. We have four million homes across the wholesale and consumer divisions, we serve 450,000 business and circa 1,000 partners. And we will continue to fight for competition with regulators and government. 

"While these are difficult times for the country I feel enormously optimistic about what people in this industry can deliver together. It's always been the case that in adversity we move forward, and we can keep this country connected for the next generation."

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