Tommy Cook did not receive any celebration cards or congratulatory phone calls when the company he founded had its first anniversary on the stock market recently. But he was unperturbed by the lack of fuss.
“It was a year yesterday, but to be honest I forgot myself!” laughed the chief executive of Calnex, the Linlithgow-based mobile network testing company he established in 2006.
Life would have been interesting enough for Calnex in its maiden year on the Alternative Investment Market without the stresses of a pandemic thrown in. But the challenge of running a newly listed business during a global health crisis – one that continues to limit the ability of the Calnex team to meet colleagues and clients in person around the world – has not hampered progress.
Its share price closed at 123p on Friday, more than double the 54p at which it debuted on the market in October last year, and in a trading update for the six months to the end of September upped its full-year profit guidance amid continuing strong demand for its equipment. The upgrade came after Calnex reported a 31 per cent rise in revenue to £18 million for the year to the end of March, with profits up 22% at £3.6m.
One of the reasons for Mr Cook’s sunny outlook is the “evolution” of 5G network. Speaking to The Herald, Mr Cook said 5G is much more than just the latest “spot technology” for consumers, as 3G and text messaging were in their day. “It is way bigger than that,” he said. “To me it is a euphemism for the evolution of the mobile network to meet the needs of the future smart cities. The change that has to happen is quite dramatic.” The 5G network will have to support the roll-out of new services that need higher quality connections, such as autonomous vehicles, as well as mobile phones and smart devices. “To achieve that, you have to almost transform the network to support it,” Mr Cook explained. “And it is going to go on for years.” He added: “That is really where our opportunity comes, because new technology needs more testing, and new test equipment. It just looks it is going to be never-ending for us, until I get my retirement plan kicked into action, and long beyond it. “They are already talking about 6G… and what the network is going to be in 10 years. It is just going to keep evolving. That’s a huge driver for our traditional industry.”
Mr Cook said current levels of connectivity across Scotland are “not great”. He feels it is good within individual cities, but significantly inferior between them. “You do need that continuous [connectivity]…but it’s not great up here. It really needs to move forward,” he said. “I guess it is a difficult country to get connectivity in because the population is crammed in [to a small number of centres].” But he noted that achieving continuous connectivity will create the conditions for new applications and technology to come in.
“At the end of the day it is not the telecoms network that creates these new services,” Mr Cook said. “We are just the infrastructure; we create the infrastructure. It is your Facebooks, your Googles and many more yet to be developed that create the applications that change your life.”
One other area of opportunity identified by Calnex is serving the huge data centres being developed by “hyper-scaled” companies such as Facebook and Amazon. “There’s at least 250 or more in the world already, and there is probably a lot more, because some of them are quite secretive,” Mr Cook said. “These massive warehouses are almost like mini-networks inside, and they are shoving huge amounts of data about. We are really trying to get better engagement with these guys. We’ve already got some opportunities with these guys, and potentially new opportunities with them. That’s an area of focus for us.”
Mr Cook said he is currently satisfied with the response that Calnex’s products are receiving and the level of traction among customers. But the challenge has “always been” finding the next opportunity. “That was one of the reasons we floated the company – better access to funding,” he said. “There was money available, but it was [a case of] how much are you willing to pay for that money. That was always the question.”
That access to capital the listing has brought could lead to the acquisition of larger companies than Calnex would previously have targeted, for example enterprises with 15 to 20 people. “We are continually looking for new things, as well as continuing to build contacts ourselves to identify opportunities ourselves,” he said.
In the nearer term, Mr Cook said Calnex was now in the process of moving its 115 staff to a hybrid working model. Home working had more successful than could have been hoped from a technical perspective, but some of the softer, “intangible” aspects of working life have been missed.
Mr Cook said Calnex is planning to add to its team, and hopes to have increased its headcount to 120 by the end of the year, having managed to recruit around 35 people during the pandemic thus far. Around 75 of its employees are based at its head office in Linlithgow, with the company also having teams in Belfast, China, India and the US. Most of the development occurs in Scotland and Northern Ireland, supported by the manufacturing capability of Kelvinside Electronics here.
Asked if the company was currently facing any difficulties recruiting staff, at a time when so many sectors are dealing with skills shortages due to Brexit and the pandemic, Mr Cook said: “It’s tough at the moment. “We are finding people, but it is tough.”