Global TMI Group
- growth in focus
telecom, media internet
It's five years ago since telecom and media were added to the range of
sectors serviced by Rabobank International. During that time, the spe-
cialized team in Utrecht has grown a strong reputation for quality
business, low risk transactions and an enviable ROS of around 25%.The
team has been quite happy to maintain a low profile, after all, says
Gerard van Kaathoven,'we're a young business and any mistake would
be fatal'. So the team has pursued a strong philosophy and strategy of controlled
growth. And according to Van Kaathoven and Paris-based Arnaud Roux de Bezieux,
they intend to keep it that way, in spite of its recent elevation to 'focus sector'
under the TMI label.
H
1 i! i
6 What'sNewS Issue 8 December 2000
TMI Sub-Sectors
(reate and producethe
Telefonica (Endemol)
content that travels through
AOL (Time Warner)
the infrastr ucture.Can be
Walt Disney
anything from text to
Wolters Kluwer
picturesormovies
ZeeTelefilms
(Intelligent) navigation
Telefonica (Terra)
and routing of signa Is
AOL
on networks
PCCW
Chello
Cable Wireless
Provision of infrastructure
Telefonica
services-wirelineor
Time Warner
wireless-toend-users
KPN Qwest
Vodafone
BPL
Global Crossing
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"3 S g cn
Ztt O «551S
WNS:
You must be pleased
TMI has been recog-
nized as a focus sec
tor within RI.
Gerard van Kaathoven
(GK):
I think there's a sim-
ple reason for that
recognition: per
formance. We had to
prove our case and
we've done that. We have shown we have
real expertise in certain areas of this busi
ness, that we are disciplined in sticking to
policy, and that we have been able to build
at least some critical mass. You can't have
a focus without critical mass. These two
issues are, I think, the main drivers.
Arnaud Roux de Bezieux (ARB):
Plus the fact that in terms of risk we
haven't lost a cent in the past five years.
So we proved that we manage the risk as
well as the revenues. Basically, we've
brought in a good risk/reward ratio. I be-
lieve that is a key factor in management's
decision to let us go further. But we can
only do that in a very controlled way.
Even though we've managed the risk quite
successfully, this is a rapidly expanding
and very complex business. So you have to
be extremely cautious in what you do.
WNS:
From your own presentations it seems as
though there are three segments in the
From left, Gerard van Kaathoven, Alexander
Gelder man and Arnaud Roux de Bezieux
industry - are
you working
with them all (see
diagram)?
GK:
You have to see
TMI as whole
because the
whole industry
had started con-
verging. At pres
ent, you pay for
the air time you use on your mobile
phone. In the future, as it becomes in-
creasingly easy to use your mobile for
many other services and facilities, you'll
start to pay according to the amount of
data you are receiving or sending. Telecom
companies, operators, the infrastructure
owners, will migrate to content.
ARB:
We'11 see integration all along the value
chain. And our aim is to move up the
chain as well.
WNS:
Can you explain what's what?
GK:
There are three primary segments - infra
structure, which we call the 'road'; net-
work and carrier services (the truck) and
content providers known to us as the
'cargo'. Each has very different drivers - as
you can see from the graphic. Some are
extremely volatile, others are asset based.
has to be looked at as a whole, including all three layers as convergence is imminent
not one single sub-sector can be fully assessed without some expertise in the others.
So we have to be very careful with what
we do because at present we're still very
much infrastructure oriented. But as Ar
naud says, we want to move up the chain
to the content level. At the same time, we
have no intention of doing everything in
every segment.
ARB:
You can see that in our product offering.
Content is the highest level of business
and it is a very interesting segment for eq-
uity-type products and M&A. But you
probably wouldn't want to do a lot of
credit products there, so we try to stay
away from financing.
GK:
Yes, we like the fee business a lot.
WNS:
That's pretty clear from your product fo
cus.
GK:
It's the way we've always worked. We are
extremely selective in what we do. Only
specific products which are chosen be
cause customers want them, not because
they happen to be what we do. In addi-
tion, we don't accept unprofitable deals.
Let me give you just one example. Re-
cently, one of our offices brought us a deal
that generated 25 basis points. We de-
clined. It's not enough. We can afford to
do an occasional deal like that. But then
we'd do it for a strategically important
cliënt, not as a one-off. We really follow
our relationship philosophy.
WNS:
That presupposes deep sector knowledge.
GK:
We have recognized expertise in the sector
we work in. That's always been part of
