Cost Transformation across 34 Markets

Background and Challenge: A privately owned business operating in 33 Caribbean, Central America and Pacific Islands countries, serving over 8mn customers and offering a range of Mobile Communications, Home Entertainment Services and Business Solutions, was undertaking an ambitious Cost and Operating Model Transformation. The challenge was removing $120m of the in-year cost, translating into a $250m annualised run-rate saving to reduce the 6.2 EBITDA debt ratio over the following five years and to support debt re-financing. The programme failed to achieve its targets in the critical first quarter and clearly needed remediation.

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Approach and Recommendations: Removing the cost with the structural integrity needed to secure the run rate in future required a change of internal processes and structure, including back office functions and technology. To ensure the targets, the Group Transformation Office focussed on eight work streams Operating Model Change, Business Process Optimisation, Customer Satisfaction, Operating Cost and Cash Flow Improvements. The transformation was broken into two divisional Transformation structures, CALA and Pacific, with a Transformation Officer leading both regions and reporting to the Chief Transformation Officer. 

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Results: Operating model transformation resulted in a 35% reduction in headcount, a 34% reduction in annualised headcount cost, and a 67% increase in the average span of control. Operating Cost improvements removed $128 million in-year operating expenses—cashflow Improvements of £110m achieved through sale, leaseback, and non-essential asset disposal.