Acquisition rescues failing ISP

by Rebecca Burn-Callander - Friday, 30th May 2008 -

When a goliath like BT gobbles up a small internet firm, you expect redundancies, rules and piles of regulation. Not so, says PlusNet director Neil Armstrong.

In 2006, the Sheffield-based ISP was in deep water. “As the market got more competitive, cutting costs meant that we underinvested in our network and customer service team,” says Armstrong. “Customers were having problems. Their broadband wouldn’t work and then they couldn’t contact us. Sales slumped.”

Despite the drop in service quality, the company still had 200,000 customers on its books. The ISP was also in possession of a unique back office system called Workplace, a bespoke web-based management platform that supported the whole business, negating the need for several different software packages and saving heaps of cash.

These two factors, and the firm’s previous good conduct, made PlusNet an attractive proposition for BT. In January 2007, the telecoms giant acquired the business for £67m, and began a full-scale turnaround operation.

“Suddenly we had financial stability,” says Armstrong. “We were able to take a long-term view of things and invest in more staff, bandwidth etc. As an independent firm, cashflow was a big challenge.”

There was only one cull in personnel. BT ditched the firm’s original CEO, Lee Strafford, who was taken to an industrial tribuneral for gross misconduct. Neil Laycock, operations director, took the helm. Under Laycock’s leadership, the ISP has added a further 97,000 to its customer base.

One year on, PlusNet’s customer service is legendary. The firm won nine out of 11 categories at the uSwitch awards, not to mention Best Consumer ISP at the ISPAs, the Oscars of the internet industry.

And although the £100m-turnover firm is now a BT subsidiary, PlusNet’s autonomy hasn’t been dented. “We still make the major decisions,” says Armstrong. “Aside from the monthly board meetings, we’re independent.”

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