Specialist
Former SVP at GTT Communications Inc
Agenda
- GTT Communications' (NYSE: GTT) operating environment – 12-24-month outlook for SD-WAN (software-defined wide area network) demand
- Competitive positioning – tier 1 network strength, go-to-market strategy as a managed service provider and sales rep quality
- Ability to improve churn
- Outlook for H2 2021 and beyond – security needs, strategic optionality and downside scenario
Questions
1.
What trends or drivers do you think will most impact GTT Communications over the next 6-12 months?
2.
What are the industry standards from a service delivery standpoint, in terms of time to deployment or the seamless aspects of it? How far is GTT from that, given that it’s had so much integration to deal with on a constant basis?
3.
Has coronavirus exacerbated install times and delivery pace? To what extent?
4.
Do any headwinds to SD-WAN [software-defined wide area network] demand remain? To what extent would you expect price compression on MPLS [multi-protocol label switching] and the term extensions of those licences to cause a lot of customers to consider SD-WAN on a longer-term basis? Do you think the price compression for MPLS will be a material headwind to adoption? Do you expect those renewals to go to SD-WAN in a few years as opposed to the next 12 months?
5.
The sell-off of GTT’s infrastructure division is in the process of closing. Is there any reason it might not get completed? What are the key takeaways of GTT returning to its roots in reverting to a last-mile connectivity CAPEX-lite model?
6.
What do you think is an attainable monthly churn rate in this industry? GTT was guiding towards mid-1% pre-pandemic. Do you think that’s where the limit stands or could it get to sub-1%? What are the drivers underpinning that?
7.
Are there any considerations about customer size? Are SMBs, particularly those on monthly contracts with inherent higher churn? Does the churn profile have the potential to improve as enterprise mix continues to increase for the business as larger enterprises increasingly consider SD-WAN?
8.
Do you think any of the incumbent cable players will start to consider SD-WAN and possibly change their sales models, making the sector more competitive overall?
9.
Is there a good way to demonstrate the longer-term cost savings of SD-WAN? How can you convince potential customers that the managed SD-WAN model is the way to go? Is that cost equation any better over the longer term or is it demonstrably better than DIY?
10.
How competitive are pure-plays such as Masergy or TPx Communications? How differentiated are the other providers?
11.
GTT exited Q3 2020 at a QBR [quota bearing reps] of USD 5,500 in sales per month. There were goals suggesting USD 7,000 back in 2019 and an aim to get to a 500 sales rep team. What do you think is an attainable productivity level based on the scale of the team? How much need is there for a direct sales team relative to the channel success you talked about, especially because the company caters to customers that already buy into the managed model?
12.
Do you think there is a need for young reps or do you think it might be more sustainable to have 100 or so reps in the USD 10,000 per month productivity range and outsource the rest of the channel?
13.
Is the best way to segment this business on the product side of things with a lot of growth coming from SD WAN, or is a significant portion of the WAN business still MPLS-oriented?
14.
Do you think the vast majority of GTT’s business is SD-WAN? Should we call it an SD-WAN business?
15.
Is there anything else you would like to discuss? Is there anything important to consider over the next few months and quarters? Do you have any closing remarks?
