Companies: ASY    SYR   

Mike Foster charts the rise, fall and rise again of Transcomm chief Andrew Fitton

After years spent struggling to carve a living out from the engineering sector, Andrew Fitton is born again, as chief executive of data network specialist Transcomm.

Following hefty losses, and a £2 million restructuring, the firm has become cash flow positive after selling its wireless service to queues of clients, including the police.

Fitton plans to piggyback a text-messaging service onto his network of base stations. He is upbeat: 'We have ways of transmitting data which mobile phone companies can't match'.

Fitton, aged 44, has roared around the small quoted company scene for years, cajoling streams of people into doing deals.

He earned his first crust as a co-driver in motor rallies before being persuaded to build an early career in computer leasing.

In 1986, Fitton secured enough finance to storm the boardroom at quoted engineer Braithwaite.

He used it to acquire control of two engineering businesses, reselling parts of them at a profit, and forging the rest into a pump distribution company called Andrews Sykes, whose name Braithwaite later adopted.

Fitton, who had other private interests, made Peter Andrews his chief executive: 'The plan was for the workforce to fall from 900 to 750, following integration. But management ended up lifting its workforce to 1,200. It wasn't supposed to be like that'.

A boardroom battle took place. Fitton had the backing of major shareholder Jacques Murray but the board backed Andrews, and told Fitton to go in 1991.

Fitton says: 'I was fed up. But Murray later won control of Andrews Sykes. Now it's doing well, and employing 550'.

After leaving Sykes, Fitton developed a National Health Service textile cleaning business, which has evolved into Synergy Healthcare, listed on Aim. Fitton is still a non-executive director.

Fitton injected other deals into a new vehicle called Scotswood. But an acquisition called The Gas Group brought with it accounting and legal problems, not sorted out until 1999.

At which point Fitton decided to get shot of his engineering businesses, and reinvigorate Scotswood, now Transcomm, via the purchase of a technology vehicle tracking service called Tardis, whose name the company adopted until the BBC objected.

Fitton purchased its core mobile data network division from US telecom giant Bell-South in July 2000.

Bell-South once had grand plans for the UK. It won a 25-year licence to transmit data from the Government, but failed to win a single licence for voice traffic. It spent £113 million trying to get a decent return from data, but failed.

Fitton says: 'I was reading a profile of Bell-South in Business Week, when I was struck by the small size of its UK operation. I reckoned Bell-South might sell, and used contacts in the US to get in touch'.

Bell-South agreed to do a deal for £12.25 million. It brought Transcomm access to a data network with 270 radio base stations, with the UK licence to use technology made by Ericsson's Mobitex arm.

'Through our service, wireless data can be transmitted to handheld receivers in packets', says Fitton. 'Even if a signal is interrupted when a car goes into a tunnel, the rest of the data is stored and picked up when the car emerges'.

Distribution companies such as TNT now use Mobitex to feed directions to their drivers, who can also use its screen to check customer signatures.

Police forces use Mobitex to send, say, car and driver details to officers on the road. The RAC is a client, as are Bass and Kwik Fit.

Fitton says that Mobitex devices can be installed in vending machines to tell clients when they are empty. Similar devices could check gas, water or electricity meters on a continual basis, leading to potential redundancies for armies of human meter-readers.

Fitton's customer search does not stop there. He has formed a joint venture with Korean-owned company Communications Network Interface to market a mobile two-way pager called Grapevine, able to send and receive e-mails as well as access the internet.

Fitton insists that, in its field, Transcomm has early mover advantage: 'Good data-based networks use different technology to those which are voice-based, and phone companies are still struggling with their next generation of mobiles'.

Licences to transmit data in the UK are held by Vodafone, Siemens and Cognito, but Fitton says Transcomm has a head start over all of them.

That said, Fitton was recently forced to carry out a £2 million cost cutting programme at Transcomm, and surgery was badly needed. Transcomm made an operating loss of £3.1 million in the six months to June, and net cash of £1.7 million was eroding at the rate of £300,000 a month.

But client orders have now made Transcomm cash flow positive. Brokers have started to forecast huge profits for the year 2003, and the price of Transcomm stock has started to edge higher.