Gamma Telecom is set to build on a strong set of financial results with a new product range and big plans for further growth. We got the story from Gamma's CEO Bob Falconer.

Gamma Telecom's recently published 2009 financial results didn't just defy the recession, they kicked it into touch. The network operator had its best year since it was founded in 2003, and Falconer is understandably in an upbeat mood. "2009 was a good year," he said. "Our gross profits rose from £32 million to £33.4 million. Most importantly, we're generating cash. We were £4.1 million cash positive in 2009, and we declared a profit of £2.6 million. Being cash generative, profitable and debt free is not a bad position to be in."

Gamma's performance bears out the belief that telecoms firms could take advantage of the global downturn, capitalising on new technology to provide cost saving systems and services to other businesses. Falconer says that steady growth in IP services, like Gamma's newly relaunched inbound portfolio, more than offset potential losses in the hard hit voice market. He commented: "We've seen a lot of growth in SIP trunking, steady growth in hosted and quite dramatic growth in our inbound services."

This growth more than made up for the fact that the company lost its biggest single customer, Tiscali, when its traffic migrated to new owner Opal's network. "It was a big chunk of our revenue," Falconer admits. "But we're filling up the capacity left behind with better margin business. It's the old adage, that revenue is vanity but margins are reality."

The rest of Gamma's success, he says, was down to conservative planning at the start of the year. Like many people drawing up a strategy for surviving the economic meltdown, his biggest fear was the spectre of bad debt. By anticipating the worst, the end of year figures have exceeded even the best expectations. "In the end our bad debt was less than half a per cent," says Falconer. "It's quite typical to budget for two per cent bad debt from a budgeting point of view, so half a per cent is incredible."

Growth is still strong, says Falconer, with up to 10 new channel partners signing up every month, and between 800-1,200 new SIP trunks sold. Strategically, the company plans to develop its reputation as a provider of next generation network fibre access services through its partnership with BT Openreach. "We were a late entrant into the sunset business of wholesale voice," Falconer explains. "But we're seen as a leader in the next gen' sunrise business of software related services. We've made a conscious effort to move the business quickly into this area and will build on this capability going forward."

Falconer is reluctant to reveal too much about the future product roadmap, but says that having an in-house software development team with proven experience of cloud-based services places the company in a strong position to capitalise on the rollout of fibre technology. His belief is that Gamma will be better able to react to a market that is undergoing rapid change than its competitors because it has little legacy infrastructure.

"We took a decision three or four years ago not to get engaged in LLU," said Falconer. "Because it was the last squeeze of the copper lemon. Most things in IT and software are predictable by nature. When they're working, they do what they say they'll do. The big problem with copper access is that quality is variable, not just from location to location but over time. Moving to fibre removes that volatility, and what we can do with it is limited by the imagination."

There are two big plans for the future. The first is a new white box service called ‘Simplicity' which will be launching in the coming weeks. Through it, Gamma will offer a complete back office and support facility for smaller resellers looking for a new business model. "It appeals to two groups," says Falconer. "Relatively small resellers who are starting out or starting again, and those who have been in other markets, like IT, who wish to add voice to their portfolio."

The second is a plan to help resellers take advantage of government promises to open up the lucrative public sector market to more SMBs. It's a tough arena to break into, but Falconer believes that it is a significant opportunity for everyone in telecoms.