Neos Networks’ primary focus will be on ensuring that connectivity serves critical national infrastructure providers, the wholesale market, and select local and central government bodies.
That’s the message from CEO Lee Myall, who said that now the company’s broadened UK-wide asset portfolio has a wider reach, as well as seeking to maintain its high levels of connectivity, strategically over the next few years, it’s geared towards maximising the use and monetisation of these assets.
Myall said, “At the moment, our plan is to work with the assets we already have and focus on making connectivity work as seamlessly as possible for our existing and new clients. We’re confident that we already have everything we need to be the go-to B2B connectivity provider across the UK.”
Myall worked at Interoute for about 15 years, where he held several roles operating integrated networks and enterprise services. During that time, he had strategic and operational responsibility for the UK, which was the largest business unit in the company, as well as heading up enterprise units in mainland Europe and the US.
After leaving Interoute, Myall became chief commercial officer at Epsilon. From there, he moved onto Kao Data, a data centre operator, where he was chief executive officer, and, most recently, Neos Networks.
Myall considers his most significant achievement during his first year in the role at Neos is in establishing how the company can continue to lead in the three key areas of the business: deep fibre, optical and Ethernet. Developing closer integration of its technical and operations team had been another high point, he said.
“On the customer front, the enhancement of our LIVEQUOTE ordering and ‘quantum quoting’ platform has been well received,” said Myall. “With the newly updated platform, we’ve made it easier for our customers to do business with us through the orchestration automation of our services, ordering connectivity from any part of the UK, across a wide range of performance parameters.”
Neos’ revenues were up slightly by 1.5 per cent to £159.2 million in the 2023 fiscal year, while it posted a net loss of £36.8 million. Its parent company has also flagged a £14.7 million adjusted operating loss for Neos for the six months to September 2023, compared to a £6.5 million loss the year before. A return to profitability will require pricing discipline in a highly competitive market.
“It would probably be fair to say we could grow even more if we chose to trash the margin, but then we’d be compromising the differentiation and value that gives us the Ethernet business we have,” said Myall. “For us, though, where we’re really starting to see the needle move more quickly and being more beneficial for us is in the optical area and in the fibre area.”
Proliferation of AI
Among the most significant developments Myall has seen in the telecoms industry of late is AI. He expects it to vastly increase the amount of data passing through the networks and to change the mobility of that data.
“For example, we’re expecting to see huge flows of data between Scandinavia and the UK,” said Myall. “When it comes to processing the AI data, rather than the flow being just between data centres, we will see more data travelling to the edge of the network for inference (edge processing), before going back out. Networks will need to be ready to adapt to this change in traffic flow.”
Another trend that Myall has witnessed has been the simplifying of connectivity for businesses in the UK. The introduction of automation or orchestration of network services, he said, is making it much easier for them to access what they want, when they want it.
“They can access connectivity across the UK from a wide range of services, from Ethernet, Cloud Connect, Dedicated Internet Access and Optical Wavelengths, with capacities ranging from 100Mbps to 400Gbps,” said Myall. “Making high-capacity connectivity easier to access is a big focus for Neos right now.”
In terms of challenges faced, Myall said that one of the biggest for smaller network providers is consolidation. Given the substantial build out of the FTTH market over the last few years across the UK, he said that consolidation was widely expected and is now starting to happen, with some players not making it.
“At the same time, we’re expecting more and more data to be driven across these networks which will inevitably lead to increased pressure on core networks to support higher levels of data,” said Myall. “However, only a small handful of players will have the core capacity to support this and those who can’t will likely be left by the wayside.”
On the flipside, Myall said that the biggest opportunity is to serve businesses looking for easy access to reliable, high-performance connectivity services.
“They simply don’t want to be waiting for weeks or months for connectivity solutions that are integral to the running and scaling of their businesses,” said Myall. “The companies that can deliver quickly and reliably for their customers will be the ones able to capitalise.”
Moving forward, Myall believes that the B2B wholesale market is only going to become more competitive, particularly with the introduction of Virgin Media’s new wholesale business, NetCo. However, he added that will only serve to benefit customers as it will provide companies with more connectivity to choose from to suit their differing needs.