RomTelecom CEO confirms problems

Yes, RomTelecom is going through a crisis. Just like any other telecom that moves on from monopoly to a position where it has cope with the competitive environment, American James S. Hubley, RomTelecom’s new CEO yesterday said. “RomTelecom is having a very hard time, because we now have competitors approaching our clients and our clients have more options to choose from,” he added.
Yesterday was the first public appearance of James S. Hubley, two months after striking a deal with RomTelecom’s majority shareholder (54%), Greek OTE Group, to become the operator’s CEO. Hubley is the first non-Greek national to head the company since its privatisation back in 1998.
He kept silent for the two months. Still, yesterday he hinted one of his top concerns all through this period was building a management team. The search for “experienced people” continues, as specified by Hubley. He has found someone to fill the executive commercial manager position – Pieter Bakker, who has an impressive background with Dutch operator KPN.
Hubley’s is not an easy mission. RomTelecom has to cope with the deregulation of the fixed telephony market, which already sees it challenged by competitors on the international telephony segment, where tariffs collapsed like in a game of dominoes. This is the most profitable segment, after all, along with the long distance calls, a segment where alternative operators are set to make a move next month.
Furthermore, RomTelecom posted net losses of 64.6 million euros last year, up 38.9% from 2001 and 948.8 million euros in revenues, 0.7% less than in the previous year. This is not to the liking of RomTelecom’s majority shareholder, as it keeps telling investors RomTelecom is soon to be the largest operator in the Balkans. Hubley’s main job, therefore, is bringing RomTelecom’s results up to OTE’s standards: 40% EBITDA until 2005. How is he to do this? By a drastic cost control and by laying off 9,000 of the 29,233 employees registered this March.
RomTelecom’s new CEO has thus far avoided revealing any concrete details about the company’s restructuring plans, Cosmorom included. The latter has seen lots of speculations, from liquidation to massive investments. Hubley said he was just an executive, so that any explanation had to come from the majority shareholder, OTE. He chose some metaphors instead: “RomTelecom will be a Boeing 747 taking off from New York, rebuilt during flight and landing in Bucharest as an F117,” he suggested. Hubley said he took the job in Bucharest for his love of adventure, too. “My hobbies are going on balloon safaris in Africa and white water kayaking in Papua New Guinea.”
Hubley comes at RomTelecom with all the expertise he gained while CEO and then executive chairman of the national Czech operator Cesky Telecom between 1995-2000, that is right at the time when the Czech fixed telephony market was being prepared for deregulation (2001).
victor@zf.ro