JT, like most businesses serving local customers, had a problem – with an Island of just 100,000 people and a competitive telecoms market, profits were falling but the cost base either stayed the same or increased. That is also not taking into account the huge bill for investing in our gigabit fibre, which has put the Island on the map in terms of connectivity and enabled us all to have better broadband services. Ironically, those broadband services are also allowing us to use new technology such as Skype, Whatsapp and Facebook messenger etc to communicate with each other, bypassing the traditional fixed line and even mobile voice and text options, reducing core revenues further.
JT chief executive Graeme Millar and his team were all too aware of the issues: ‘We are very small and if we want to deliver good products and services in Jersey to Jersey residents at sensible prices, we need bigger markets elsewhere, just to spread the cost of doing that.’
His customers, who live in our outward-facing international financial centre, also wanted to travel with their phones and so JT needed to negotiate roaming agreements in a world that was dominated by major telcos which made JT and its negotiating power look tiny.
Fast forward to today and believe it or not there aren’t just 100,000 JT SIMs floating around the world – those tiny little cards which carry data and identify us in our mobile phones and other devices – but around 5.3 million. Meanwhile, the company delivers about 4.8 billion messages a year for banks and retailers globally through its messaging business; and its Fraud Protection Services are the preferred choice for many, including the Australian Banking Association.
70% of revenues now come from outside of our Island. Although profits are lagging behind due to initial investments, Mr Millar believes that within around three or four years, their international business will be generating greater profits than the local one.
The decision to develop internationally was not just about the bottom line, it was also – in the tradition of Jersey’s entrepreneurial heritage – about innovation. JT’s people were creating products and services that people around the world wanted to buy. The telecoms industry is also not one in which you can stand still (just think about Blackberry – once around 20% of the global smartphone market, now 0%).
Jon Bundesen, chief technology officer and one of the founders of JT Denmark (formerly NeoConsult) explained: ‘Once it was just fixed telephony and then came mobile and then the internet revolution. Now we are suddenly into IoT and streaming TV. So the internals of a telco company change fast, really fast, and it’s important to be part of that frontline, otherwise you might become redundant one day. Who would have thought we would be streaming TV from Al Jazeera in a traditional phone company five years ago? The bandwidth now is so vast that you can do almost anything. It’s all about data.’
The international journey JT is on now started nine years ago when they bought eKit in Melbourne, Australia. ‘That was a business that sold low-cost roaming, primarily to students in North America, who were coming for gap years in Europe,’ said Mr Millar. ‘That also gave us an Federal Communications Commission licence to operate as a telco in the USA, which has proved to be incredibly important to us. It gave us a lot of roaming traffic, which, in turn, has been the backbone of both negotiating all the roaming agreements that everyone in Jersey benefits from, but also has given us volume that ultimately meant last year we reduced our roaming prices in Jersey by 95%. We could only do that, because we had all this volume that we were able to get discounts with.’
To put into context JT’s success in roaming agreements, Vodafone has only around 20 more than JT’s 527 agreements in 195 countries. Vodafone has 400 million subscribers and over 100,000 staff globally. JT has under 100,000 subscribers and 600 staff.
The acquisitions did not stop with eKit. ‘In 2012, we bought a business called Worldstone, in London,’ said Mr Millar. ‘That gave us a whole bunch of third-party partners that supported us around the world. And from that we won some big contracts, like one with Kraft Heinz, the world’s third-biggest food company, based in Chicago, to supply all their telephony worldwide.
‘At about the same time as we bought Worldstone, we were starting to develop the Internet of Things business. We’ve been particularly strong in North America. We have a number of big customers and our biggest IoT business is a car-leasing firm in North America.’
IoT, or Internet of Things, is the ability to connect devices anywhere and to send and receive data from those devices. With JT’s extensive roaming contracts, their SIMs work in most countries around the world. That means any device could be moved around the world and still be able to send and receive data.
One of JT’s customers that is not too far from home is Asset Monitoring Solution Group in the UK, which attaches SIMs to vehicles in order to track them, whether that’s a bus or fleet of company cars. It is a solution that has environmental benefits.
‘The more you know where the vehicles are being driven, what route works best and how much fuel is consumed and so on, the better,’ said Mr Millar.
‘We’ve brought that solution back into Jersey and our own vans now operate with that, which has not just got environmental benefits, but means we’re now quicker at getting out to customers because we know where the vans are, we know where our nearest engineer is if a customer’s got a problem. That’s all enabled through JT connectivity and through the NOMAD platform in Denmark.’
In 2016 as JT’s IoT business started to grow, they needed software to manage what was then over a million devices, connectivity and billing. They found NeoConsult in Denmark, and its platform called NOMAD, and found it to be a perfect fit. They invested in it by buying 20% of the company to ensure the long-term viability and reliability of the services they were selling. For example, they have a customer which fits heart monitors with defibrillators and they cannot afford for these to lose connectivity, they have to be monitored effectively.
Last year, JT bought the remaining 80% of NeoConsult and the business became JT Denmark. Its offices are situated in the innovation sector of Copenhagen, surrounded by universities and technical colleges and around 140 other start-ups. It’s a hub of entrepreneurialism, research and learning. JT staff regularly travel to the offices and some of the 25 staff in Copenhagen also come to Jersey, transferring skills and knowledge. It’s a two-way benefit.
Together they are working on some really exciting projects – one of these is for broadcasters. Instead of having to mobilise a satellite truck or bulky kit and staff to go out with a reporter to feed pictures back live, JT Denmark has developed an ingenious method of fixing several SIM cards to a camera. It means the SIMs work like multiple lanes in a highway, enabling large amounts of data to be carried. It is used by CNN, the BBC, Al Jazeera and a host of other international broadcasters and news agencies. It is likely you will have already watched pictures sent to your TV by the JT SIM-enabled cameras. Think World Cup, and even the recent tragic news reports from Sri Lanka. JT believe theirs is the only solution like this available.
Other JT SIMs are being placed into vending machines so operators can assess when it needs filling, and they might even be used in bins to decide when to pick up rubbish.
Then there’s the Albanian fishing fleet. To be allowed to fish they have to be registered and monitored where they are actually fishing to keep within quotas. JT SIMs are enabling that connectivity.
The founders of the Denmark business readily admit that without JT they would not have been able to develop the business at the rate they are. Rune Bundesen, chief security officer of JT Denmark, said: ‘We’ve had two growth curves across the last 17 years, but I’ve never seen anything move as fast as this. In Denmark, it was big news that a company in one year could get 100,000 customers. We’re doing that every week now – and sometimes even more. I’ve never seen anything in the telco world that moves at this pace.
‘JT is a lot of people at 600, but it’s not 15,000 people. So we can move very, very fast when we need to. It’s a very agile working place. It would have been impossible to do what we have done if that wasn’t the case. So, I think for us, we found precisely the correct partner.’
JT’s agility and its ability to allow the technology creators easy access to its systems has helped it take a lead and out-manoeuvre larger businesses.
The focus of the IoT business is not just in Denmark, JT have moved the NOMAD data centre to Jersey, both for operational and cost reasons. With staff in the Island already working 24/7, 365 days a week to look after the JT network, adding the data centre here makes sense. It shares the staff overheads and has improved the resilience of the platform. It also brings new jobs.
Ultimately, why should local customers care about these global ambitions? Firstly there’s the taxes (JT pays 20% corporate tax as well as GST and employee taxes) and dividends going into the Treasury. We all benefit from that, but there are other pluses too, such as bringing skills into the Island, new technology and ways of working, lower prices for local customers and global recognition and reputation for Jersey. Graeme Millar makes it clear their priority is always to look after their home customers and deliver a good return for their one and only shareholder – the States of Jersey – in other words, all of us.
It is a long way from Jersey Telecom’s founding in the Island in 1888, but the speed of the international business growth is very fast. While profitability is lagging behind revenues during this investment phase, indications are it will not be long before the economies of scale ensure JT international and Jersey benefits from this global ambition in cutting-edge technology.