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Press Release -- October 15th, 2012
Source: Pacnet

Pacnet Announces New Strategic Plan to TRANSFORM ITS BUSINESS

–       Company will refine its business model and further enhance the services it provides to enterprise and carrier customers –

–       Planned initiatives will fast-track the transformation of the Company and enable Pacnet to enter a new phase of accelerated growth and improved profitability –

–       Company introduces new senior leadership team consisting of best-in-class talent and some of  the most highly regarded technology and telecommunications experts in the industry –

SINGAPORE, 15 October 2012, Pacnet (“Pacnet” or “the Company”), a leading provider of integrated network and technology solutions in Asia Pacific, today announced that recently appointed Chief Executive Officer and highly regarded industry executive Mr. Carl Grivner and the Board of Directors have developed a proactive strategic plan to fast-track the transformation of the Company, create a more nimble and competitive organization, and enter a new phase of accelerated growth and profitability. 

Following an extensive review of many options, the Company is commencing a series of initiatives that will have a transformative impact and position Pacnet to address key objectives and priorities.  These include focusing exclusively on high margin core businesses, upgrading offerings, streamlining operations, and reducing costs. Additionally, Pacnet will focus its expansion efforts on markets with the greatest opportunities and invest in the future through more technology and network upgrades, new data centers, and a comprehensive suite of managed services. To efficiently carry out these initiatives and maximize their benefits, Pacnet will leverage its well-known brand, valuable set of assets, solid customer relationships, and strong underlying business. 

“Our aim is to become the leading provider of network and technology solutions for enterprise and carrier customers in Asia Pacific,” stated Mr. Carl Grivner, Chief Executive Officer.  “We currently have an unquestionable market leading position and Pacnet is a key gateway into Asia Pacifics vibrant markets.  However, in order to maximize the many current market opportunities, better serve our customers, stay ahead of competition, and build the strongest Pacnet possible, we are planning to implement a number of transformation initiatives.  We intend to leverage and build on our very strong foundation but we will also make important and necessary changes that will refine our business model and enable Pacnet to enter a new phase of accelerated growth and improved profitability.”

Overview of the Transformation Initiatives

While there were several important initiatives already underway, the Companys new strategic plan is officially launching in the fourth quarter of 2012.  The plan comprises five key strategies including:

1)      Focus exclusively on carrier and enterprise customers.

Fine-tuning its commercial approach will enable the Company to deliver better and more targeted solutions to its carrier and enterprise customers, who include some of the worlds leading content providers and e-commerce firms.  This will also translate into greater sales of higher margin business for Pacnet. 

2)      Leverage existing unrivaled data center capacity and introduce additional managed services for customers.

The Company will look to deliver “IT as a service” by introducing a wide range of new value added services such as full data management, virtual hosting, and security products.

3)      Expand the capabilities and reach of Pacnets network in China. 

In line with its intention to focus expansion efforts on markets with the greatest opportunities, Pacnet will commit more capital and resources to its China business.  The Company will work to more fully leverage its existing network and licenses in China, including its domestic IP VPN license.

4)      Implement an industry leading operating model that enables superior execution and the delivery of an unrivaled customer experience.

The Company will elevate operating standards and will create industry leading systems and processes that will enable consistent and efficient execution.  Pacnet also commits to a new “Customer Culture” philosophy such that all efforts will be geared towards delivering the very best solutions and superior service to customers.

5)      Rationalize the business to free capital for more value added services.

Pacnet will fine-tune its strategic focus and streamline the organization in order to strengthen the business for the long-term.  To achieve this, the Company will divest certain parts of its business that are no longer considered core and in the fourth quarter it will exit commoditized businesses such as the residential internet service and wholesale voice segments.  This will enable the Company to focus exclusively on building out high margin value added services offerings.  Moreover, Pacnet will streamline the underlying operations to create an operating model that is customized around the most important offerings. As part of this, the Company will reduce its global workforce in non-strategic areas and by a total of approximately 30%, thereby lowering annual expenses by approximately US$30mm. 

The planned transformation initiatives will result in a number of specific benefits to Pacnets overall business and this will start to take effect immediately and continue over the next three years.  Pacnet will be able to better serve its customers, it expects that revenue will grow much faster than previously, and the business will have a leaner cost structure as approximately US$30mm in annual expense will be removed.  A portion of the resulting capital resources will be re-invested back into the business to further the many planned initiatives.

The Company and its shareholders are confident that it has ample liquidity to fund all of the capital expenditures related to executing the new strategies without jeopardizing the strength of the balance sheet.  Further, many of the planned changes will bolster the Companys cash generation capacity and give Pacnet more financial flexibility.  The Company also has the backing of a high quality investor group and strong lines of credit with banking partners.

Pacnets New Organizational Model and Leadership Team

The New Organizational Model

In support of the planned initiatives, Pacnet has realigned and refined its operating model.  The Company is restructuring the sales organization to create two separate divisions Enterprise Markets and Carrier Services.  This is designed to drive revenue in two primary areas and provide solutions to two very unique sets of customers with specific product, pricing, service, and support needs.

The creation of a dedicated Managed Services Unit will channel investment towards enhancing Pacnets comprehensive suite of state-of-the-art products and services.  A dedicated focus on driving innovation and product development, building on the Companys data center platform, will further differentiate Pacnet from its peers and strengthen its position as a leading gateway into Asia Pacifics digital marketplace. 

Supporting the teams renewed commitment to customer experience will be cross-functional operations and financial teams that will ensure the delivery of superior execution in customer service, financial management, and operating systems.

The New Leadership Team

One of most important recent actions has been to ensure the senior leadership team consists of best-in-class talent with the most current technology and telecommunications industry expertise available.  Mr. Grivner has therefore redesigned the composition and structure of Pacnets senior leadership team, recruiting key industry experts, promoting various existing senior leaders, and redeploying and redesigning the responsibilities of certain senior managers to maximize their talent.

As separately announced today, Pacnets senior team has been bolstered by the landmark hires of some of the most highly regarded experts in the industry, as well as important internal moves, which complement the strategic initiatives now being executed.

§       Chief Financial Officer Brett Lay, who has been with Pacnet for six years, will play a critical role in setting and helping the Company adhere to financial targets that the business is seeking to meet.

§       Jim Fagan has joined the Company as President of Managed Services.  Mr. Fagan will drive the build-out of this new managed services division which will bring an expanded suite of new services to benefit customers. 

§       Recently appointed Cardi Prinzi will lead the newly defined Enterprise Markets division.  Mr. Prinzi will source opportunities with enterprises looking to connect into and across the Asia Pacific region and drive sales in this division. 

§       John Garrett, most recently Pacnets Managing Director of Southeast Asia, will lead the Carrier Services division.  Mr. Garrett will source opportunities with carrier service providers looking to connect into and across the Asia Pacific region and drive sales in this division. 

§       Andy Lumsden has returned to Pacnet to assume the role of Chief Technology Officer.  Mr. Lumsden will be responsible for maintaining Pacnets technology leadership and assisting with developing the next generation of network platforms.

§       Grace Guang, who has been a member of Pacnets management team for seven years, will take on the additional position of Chief of Staff, in addition to her current role as General Counsel.  Ms. Guang will play a central role in driving the new strategies forward, particularly in relation to growth plans for China.

§       Head of Human Resources Anne Adam has held management positions at Pacnet for 11 years.  Ms. Adam will play an important role in ensuring the internal transformation process is smooth and she will continue to drive all human capital initiatives going forward.

Mr. Grivner concluded, “We understand and appreciate that some of the changes we are making may be difficult but they are necessary to build a stronger Pacnet.  Once we have rationalized our operations and completed the planned refinements, we will be better positioned to roll out our new strategy.  We also now have in place a new and extremely qualified management team to execute what is planned and we and our shareholders are excited by what this will mean for the business.  Our streamlined operating model will be much more focused, each specific business area will have a very strong leader, and we will be singularly focused on effectively serving our diverse customers as their businesses grow and evolve in the Asia Pacific region.” 

About Pacnet

Pacnet is a leading provider of integrated network services and data center platforms for enterprise and carrier customers in Asia Pacific, delivering high-performance technology solutions over the regions most extensive high-capacity submarine cable systems.  Ownership of over 46,000 km of fiber connected to its regional data centers gives Pacnet unparalleled connectivity to major business centers throughout the Asia Pacific region. Its complete set of solutions for managed data, private line, data center services, and content delivery, combined with its expertise in serving Asia Pacific, have made Pacnet a trusted services provider for large businesses worldwide, including many of the Fortune 1000.  Pacnet is headquartered in Hong Kong and Singapore, with offices in all key markets in Asia and North America.  For more information, please visit:  

For more information, please contact:

FTI Consulting

Tom Evrard

Tel: 65 9107 6123


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