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Pacnet to cut one-third of staff, exit commoditized biz

In order to accelerate growth, the undersea cable operator looks to divest some segments, focus on enterprise customers, build high margin offerings, and allocate more resources to tap China.
Written by Ryan Huang, Contributor

Pacnet, a provider of integrated network and technology solutions in Asia-Pacific, will shed a third of its workforce to save US$30 million a year. This will see the company exit commoditized busineses such such as the residential Internet service and wholesale voice segments, and focus more on high margin service offerings.

This is part of new strategic plans by recently appointed CEO Carl Grivner and the board to fast-track the transformation of the company and create a more nimble and competitive organization "following an extensive review of many options", according to a statement Monday.
"We intend to leverage and build on our very strong foundation but we will also make important and necessary changes that will refine our business model and enable Pacnet to enter a new phase of accelerated growth and improved profitability," said Grivner in the statement.

The plans also include the appointment of a new leadership team including a replacement chief technology officer, and a president for managed services, and a president of enteprise markets. Grivner had taken on the top job in July, nearly two months after the sudden departure of his predecessor William Barney.

The company said it would divest certain parts of its business that are no longer considered core and in the fourth quarter would exit commoditised businesses such as the residential Internet service and wholesale voice segments. This would allow it to free capital for more value added services.

Pacnet also aims to focus exclusively on carrier and enterprise customers, that will help generate sales of higher margins.
There will also be efforts to introduce more value-added services for data centers such as full data management, virtual hosting, and security products.

Another key pillar of its new strategy is in expanding the capabilities and reach of its network in China, where it will commit more capital and resources. It will work to more fully leverage its existing network and licenses in China, including its domestic IP VPN license, the statement said.

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