Magdalene Telecom – in France

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

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

3. 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

4. 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’

5. Introduction to Magdalene Telecom • It’s Our People That Make The Difference

6. 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)

7. Activities & Structure Nokia TETRA VAR GSM 2.5 / 3G Nokia Mobile Phones Reseller Nokia Care Partner Cellular Support Services Marconi Care Partner Network Management Systems Active Subsidiaries Netherlands Africa France Finland Italy

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

9. Turnover worldwide

10. 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

11. 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???

12. 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

13. 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

14. 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” • 40-50 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

15. 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

16. 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

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

18. Our Team • Vaughan Chandler: • Vaughan.chandler@mailhec.net • Michel Le Bars • Michel.le_bars@mailhec.net • Atsushi (Andy) Masai • Atsushi.masai@mailgec.net • Boris Polivka • Boris.polivka@mailhec.net • Kurt Weber • Kurt.weber@mailhec.net