Magdalene Telecom – in France Best in France Case Study Jan May 2004 Vaughan Chandler Michel Le Bars Atsushi Masai Boris Polivka Kurt Weber

1 Contents 1 Executive Overview 2 Magdalene Telecom 3 Starting a business in France 4 Constraints & Benefits 5 Essential Advice

2 Why did we choose Magdalene? Nicolas Grante Entrepreneur experiences in Netherlands, UK, Poland Owns several individual companies in France Has worked in Denmark, Eastern Europe, Switzerland, Nigeria… Start-up Initiated in December 2003 Provides a different perspective on HR issues from the established corporate perspective

3 Executive Overview Magdalene Telecom is a British company that provides outsourced technical support to telecommunication providers Reasons for locating in France:  To address the opportunity of a large tender  To support France and French speaking markets  It was easy to replicate from the UK business model There are no significant benefits of being located in France, besides access to the market There are many small issues about being located in France – none of which are ‘showstoppers’

4 Introduction to Magdalene Telecom It’s Our People That Make The Difference

5 Company Overview – Magdalene Telecom Established in UK in 1996 to provide high quality infrastructure support to telecommunications providers Focussed on products seen as ‘non-core’ by Telco providers (e.g. GSM networks) Opened office in France in 2003 – A start-up Over 210 employees Globally 10 Employees in France  5 on secondment from the British office  1 for sales & Marketing, 9 service engineers Heavy reliance on Nokia (currently 70% of business)

6 Activities & Structure ActiveSubsidiaries NetworkManagementSystems Marconi Care Partner Nokia Care Partner GSM 2.5 / 3G Nokia TETRA VAR Nokia Mobile PhonesReseller Africa France Italy Finland Netherlands CellularSupportServices

7 Key Product Suppliers: Nokia Marconi Harris Lucent Nortel TS Comms Savox Aircom Private Networks: O2 Airwave Anadarko, Algeria BBC Dolphin France Highways Agency Irish Rail Network Rail Scottish Ambulance WS Atkins Sussex Police Cheshire PoliceOperators: Orange UK Orange France T-Mobile C&W Global Crossing H3G Moratel, Morocco NEOS O2 Opal Your Comms Cegetel Band X Current Clients Base

8 Turnover worldwide

9 Why Magdalene came to France Magdalene’s first purpose was following a large tender in the French market  This tender was not successful The French market was also a desirable target market  Large enough to support a full office  Provides access to other French speaking markets: –Belgium –Switzerland –Northern Africa The market allowed the best duplication of the UK business model  The other large market, Germany, operated in a different manner  This would have meant significant changes to Magdalene’s business model

10 Benefits of being located in France Access to a large and developed market Better access and service to French speaking markets (Europe and North Africa) Relevant education for desired workforce Provides a European identity European mobility Others???

11 Constraints in France In establishing small-business in France Rules and regulation  Not transparent  Can be incorporated in 2-3 days at a bare minimum  Must advertise creation of company – perceived as useless and a waste of money Process & procedures  Guidebook (became available recently)  Has improved process, but there is still a way to go Public administration  Public administration will not adopt a business related focus  Dealing with public sectors for licenses  Many small and convoluted taxes mean it is difficult to generate accurate forecasts Establishing Office space Expenses  Required upfront payment of 1 year Key Takeout: France is not conducive to setting up a new business

12 Constraints in France In operating small-business in France Employment contract  35 hour work week –Manageable, but does result in some loss of competitive advantages Public administration  Public administration will not adopt a business related focus  Dealing with public sectors for licenses  Many small and convoluted taxes mean it is difficult to generate accurate forecasts Key Takeout: France does not provide a competitive edge

13 Differences in employment French prefer salaried approach, even with significantly lower salary  e.g. Annual Salary of 36,000 Euro chosen over 350 Euro per day on a contract basis  Termination of contract requires 1 month notice The UK encourages a “mercenary approach”  self-employed in the UK (on contracts)  Encourages a “mercenary approach” Profit Sharing by all employees: 20% of total Global profit Training  5000 Euro per person  2 week Training program in UK for new employees “No competition clause”: exist, but they are difficult to enforce

14 Adaptation to France The main adaptations from the UK model were all caused by the fact that UK was established and France was a start-up  Recruitment needing to understand utilisation restraints and a short pipeline of sold work Recruitment was set at market rates  UK staff remain on the UK package for 6 months Recruitment of contractors is done through a third party rather than direct  Moves contractual obligations in France one layer further away Little change was perceived in other areas including  Management Development  Workforce Planning  Performance Appraisal  Motivation  Job Design, Job Assignment  Communication Policies  Training

15 Essential Advice What advice do you offer to other companies in this sector concerning use of France as a location? Before coming to France  Find a great accountant Adaptation while in France  Get to know your great accountant Future investments in Europe  Creating a subsidiary is a big investment (than one could expect.)  Things are improving, but are still not transparent

16 We Thank Mr. Nicolas Grante: Directeur Ventes et Operations/Head of Sales and Operation

17 Our Team Vaughan Chandler: Michel Le Bars Atsushi (Andy) Masai Boris Polivka Kurt Weber