Colt has released details around how it plans to reduce Group costs while laying the foundations for future growth. At the time of its Q3 interims (see Colt knocked slightly in Q3), management explained that it had been reviewing possible initiatives to address the cost structure of its legacy business.
CEO, Rakesh Bhasin, has today announced that as a result of increased use of its shared service centres (located in Barcelona, India and Romania), and “consolidation of resources" following system and process improvements, Colt will be able to achieve savings of c€44m per annum. Of this, approximately one third will be invested in new roles to achieve a better balance of skills in its managed network and IT services business. The announcement follows closely the news that Vodafone is accelerating its integration plans for Colt competitor, Cable & Wireless - see Vodafone speeds up CWW integration with new unit.
Colt will take an exceptional charge of between €28m and €33m in Q4 2012 based on the costs of implementing these plans. The majority of the cash outflow to support these programmes will fall into 2013 and the payback is expected to take just over a year. Bhasin concluded by saying that the company’s performance “remains on track”.