HickoryTech: Branching Out
Media-Entertainment
Written by John Zorabedian   
Wednesday, 30 April 2008
HickoryTech: Branching Out - American Executive - RedCoat Publishing
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The US telecom industry has changed rapidly since deregulation under the Telecommunications Act of 1996. To take advantage of access to new markets, Mankato, Minn.-based HickoryTech Corp. in late 2005 acquired Enventis, a provider of IP-based data and network solutions for business customers in the upper Midwest.

John Finke, HickoryTech’s president and CEO since June 2006, said the company is building on its 110-year history of providing telephone service to consumers to expand its business throughout Minnesota and the Midwest. In 2007, the company’s revenues grew by 18%, including a 280% increase in net income, after a loss from continuing operations.

HickoryTech: Branching Out - American Executive - RedCoat Publishing
John Finke, President and CEO
The key to this growth spurt has been the Enventis acquisition. Finke said the company’s strategy was to buy more fiber-optic infrastructure to expand its network in Minnesota into the Minneapolis and St. Paul markets. The acquisition brought the network and employees with expertise in the B2B markets HickoryTech wanted to access. And from its base in Minnesota, the company’s Enventis division can connect clients to their operations throughout the region.

“The acquisition fit right into HickoryTech’s strategy to further grow our business-to-business portfolio,” Finke said. “It allowed us to expand that business much quicker than if we had to build it piece by piece.”

HickoryTech’s legacy, consumer side of its business still provides the majority of the company’s net earnings, but Enventis contributed more than half of the company’s revenue in 2007. And as a certified gold partner of Cisco network products, the name and reputation of Cisco will allow Enventis to sell value-added services to a strong customer base.

“From a net income and EBITDA contribution factor, the telecom sector still is very important and provides more of the bottom-line income than our Enventis sector,” Finke said. “The Enventis sector is in the early stages of business growth. That’s been our focus—finding a way to diversify our company’s revenue so we are not as dependent on our regulated telecom revenue.”

Managing growth
As HickoryTech expands its regional footprint, managing growth is the biggest challenge for the company, Finke said. “We need to continue to add resources, processes, and procedures to allow us to profitably grow this new line of business,” he said. “To continue that growth, we have to provide the customer service and the follow-up service to maintain our reputation of being able to provide the technology and quality service.”

Fierce competition in the telecom industry from cable companies meant diversifying service offerings to include digital television in addition to voice services and high-speed Internet. “There are challenges in keeping our products and services competitive in the marketplace from a cost perspective, yet we’ve maintained a very competitive bundle of residential services,” Finke said. “We’re always listening to our customers and understanding their needs so we can offer services they desire and continue to provide them quality local support, an important differentiator.”

Creating a culture that responds quickly to competition is essential, as is leadership with the vision to recognize opportunities. “As competition changes, we have to be innovative, creative, and quick to understand the customers’ needs to develop solutions and get them into the marketplace,” Finke said. “Having the discipline to make the right business decisions is key in our industry and for our business.”

HickoryTech’s plan is to remain competitive on the consumer side as it expands in the commercial sector through Enventis. The company has deployed multi-protocol label switching to provide wide-area networking services to its business customers, with the capability to connect through multiple carriers and reach customer locations outside its network footprint.

“We are looking to grow the B2B focus of our company, both through organic growth and through small acquisitions to fill customers’ needs,” Finke said. “We focus on the customer. In a technology business you can’t focus on technology for its own sake. Our key to success is keeping the customer at the center so we know what they want, and we’re looking for technologies to help add value for that customer.”

Bringing along the company’s employees with a common strategic vision is what allows companies to grow and adapt in a competitive marketplace, and HickoryTech understands the importance of communicating strategic goals and plans to the entire company.

“The success of our company is based on our employees, as I think every business is, ultimately,” Finke said. “We have created the strategy, the vision, the mission, and we are communicating with employees so they know what we are trying to become and the progress we’re making. That’s key to being able to grow a company—employees have to know where you’re going.”
 
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