Marston's PLC has long been known as one of the UK's largest independent pub retailing businesses and brewer, not so well know is its burgeoning telecoms business headed up by Operations Director Rob Derbyshire.
Marston's Telecoms was formed in 2008 by Mike McMinn, Group IT Director at Marston's PLC, to generate savings for the group through purchasing comms services on a wholesale basis from Openreach. These savings proved to be substantial and the move provided a platform for expansion under the guidance of Derbyshire. He joined Marston's Telecoms from the University of Birmingham where he was responsible for the procurement and management of all of the telecoms services. "When the role at Marston's came up it seemed like an exciting opportunity to do something similar, but also very different and with the scope to develop the business in new ways," he said.
A big turning point for Marston's Telecoms was its transformation into a true wholesale provider of comms services. "Previously we just resold broadband from PlusNet and TalkTalk, but since we made the decision to implement our own network we have improved our margins and crucially gained more control over our solutions," added Derbyshire. "Our main customer is of course Marston's PLC, but our growth is coming from external clients. We have contracts to supply two other pub companies as well as some corporate customers. This demonstrates the attractiveness of our proposition outside of our historical vertical."
Marston's Telecoms was born out of a retail operation and its approach is influenced by this. "Our priorities are high levels of customer service, a strong value proposition and a degree of uniqueness," explained Derbyshire. "Also, the management of Marston's Telecoms originates from an enterprise IT background and our core network was designed with the principles of being always-on and fully resilient."
Marston's understanding of the market and how to operate in the wholesale space has advanced by leaps and bounds. And coming from a reseller-only background this has been a big challenge, particularly for the provisioning team. "Our main challenge now is how to grow the business with a lean staff base," commented Derbyshire. "We've addressed this by selectively outsourcing certain administrative tasks while keeping key customer interactions directly managed by us. Maintaining our growth will no doubt require investment in additional roles."
Marston's Telecoms has four full-time staff and last year turned over £2.6 million with a £300k profit. This year the company is forecasting a 40-50 per cent increase in sales and a greater rise in profit. "My immediate goal is to grow the business to an EBIT of £1 million," added Derbyshire. "We're now looking to expand our proposition and offer our capability to both channel partners and also businesses within our vertical. To achieve this we have developed strategic partnerships with connectivity partners such as SSE and TalkTalk, as well as hosted VoIP through MyPhones.com."
Derbyshire also noted that Marston's Telecoms' growth strategy to date is down to the size of the business and being able to deliver bespoke business grade telecommunications solutions to customers. "We see bigger players in the market offering good products but in an inflexible way," he added. "We're able to choose products for our portfolio that offer the best for our customers, and then present these to them in a complete value-for-money solution. Our challenge will be to maintain this approach as we grow, create sustainable and long-term growth for the business, diversify income streams, and develop new markets for Marston's Telecoms."
The current state of the market is a point of interest for Derbyshire: Broadband has become commoditised, pricing has fallen, but the wholesale price of broadband to carriers has remained broadly stable while bandwidth requirements are ever increasing. "This dichotomy means that some diversification must occur to remain stable," he said. "I see the development of Ethernet products as a key market trend, allowing access to cost-effective connectivity with synchronous bandwidth and crucially an SLA.
"Alongside this, the market for hosted VoIP is strong. MyPhones.com offers a strong product set at a disruptive price. Hosted VoIP is now a part of every new business conversation we have, and makes sense for companies that are going through a whole telco suite refresh. This, coupled with great value 3Mb GEA from TalkTalk, creates an interesting opportunity."
Moving into the ISP industry from a Higher Education background and learning how it all works ranks as Derbyshire's biggest career achievement to date. He has re-shaped Marston's Telecoms to the point where it can offer cogent, innovative services to customers outside its traditional vertical, including channel partners.
"Resellers offer the ability for businesses to buy niche or bespoke services," he added. "It's an exciting time for the channel with opportunities to innovate and create compelling solutions."