Colt unveils plans to exit IT services
Telecoms outfit Colt Group has outlined plans to “focus on core strengths” of network, voice and data centre services with a managed exit from IT services.
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Management said on Tuesday the implementation of the new business plan would be started “as soon as possible”.
IT services would continue to need considerable investment in the short to medium term in order to turn a profit, Colt explained. “We do not believe this business can compete and grow successfully with a level of risk that is acceptable,” the company said.
It said the managed exit from IT services would happen over the next two or three years. It will continue to honour existing customer contracts through to termination, but will no longer seek new business.
Colt said the financial implications of the business plan would be exceptional cash costs of €45m-55m, a non-cash impairment charge of €90m and one-off restructuring costs of €25m relating to the core business.
It expects to save €25m from the restructuring, reflected in core business operating profits partially in 2015 and fully in 2016.
“We are taking decisive action to become a more focused and disciplined organisation which we believe will accelerate the performance of our core business,” said chief executive Rakesh Bhasin.
The group, which is currently undergoing a takeover by its largest shareholder, asset manager Fidelity, said the business plan is unrelated to the offer.
Read more: Fidelity says 190p per share Colt takeover offer is final
The stock was flat at 187.98p by 08:41 on Tuesday.
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