After seven years reshaping and re-branding Spark to thrive in a flatter, more competitive telecommunications market, managing director Simon Moutter is moving on. He talks to Bill Bennett
Simon Moutter returned to Telecom in August 2012 after four years as Auckland Airport’s chief executive. At the time, the company and the telecommunications sector in general were at an important turning point. The company’s former network division, Chorus, had recently de-merged from Telecom, a move that allowed Chorus to participate in the Ultra-Fast Broadband project.
This reset the structure of the industry. It meant all fixed service providers, including Telecom, would now operate as resellers. Telecom was no longer an integrated player. Above all, the restructure removed that vestige of its monopoly: Telecom’s local access copper loop.
Moutter says: “The Telecom I arrived at in 2012 was operating in a holding pattern. Paul Reynolds (the former CEO) had decided to move on. A new board had been appointed and its first job was to find the new chief executive. At this point not much had been done to reset the organisation as a reseller. That became my job.
“There had been a lot of change on the board. Only two members had continued from the old Telecom board: Kevin Roberts and Murray Horn. The new chair was Mark Verbiest. The board was anxious to get on with life as a retailer rather than as a vertically integrated telco.”
Although the industry had changed, Moutter says at this point Telecom hadn’t. “The culture was still operating like a vertically integrated infrastructure player. The business had been going backwards on most metrics: market share, revenue, employee engagement and customer satisfaction measures. It had declined for a decade. I was there; I was part of that. We had been on the back foot for a long time.”
He says at the time he originally left Telecom, in 2008, the internal language used to describe the best strategy the company could employ was “walk backwards slowly”. It was still there in 2012. The plans were still predominantly about managing decline.
A lot of Moutter’s early work after returning to the company involved shifting to a winner’s mindset. He says: “As a retailer you have to win every day. Retailers live and breathe through being the preferred supplier, and therefore being able to make a sale.
“That takes a winning mindset and a strong belief in the company. It’s hard to sell when you don’t believe. A lot of my early work was around mindset shifting, letting people understand that we are good, that we can operate like a retailer. We introduced what we call ‘the retailer’s rhythm’, which was to move from an infrastructure company mindset of looking at results and responding to issues monthly in arrears, to daily reporting and a 24-hour response time.”
He says: “I believed we could move forward because we had under-performed in mobile for a long time because we were caught with the wrong technology. We were on the CDMA path. It was a brilliant technology but it had no global scale. We were always competing with at least one hand behind our back. The world had gone GSM.
“The best decision my predecessor Paul Reynolds made was to move to HSPA (High Speed Packet Access) early on the 800 MHz spectrum band. It was a risky call at the time he made it as that could have become stranded too, but, fortunately, the 800 MHz band became standard spectrum. We were able to mainstream on to the global technology.” Moutter says up to this point Telecom had been losing a lot of customers because it didn’t have the right mobile technology.
Having the right technology meant Telecom was now on the right track in mobile. Moutter says he identified another key to the company’s future during his first months leading it. We had the scale and the technical capability to make a move into non-telco digital services, he says. “We had a belief we could enter the cloud IT business and could build a company that was a specialist in cyber security and analytics. We knew we could get into streaming media. These were all things we could get our team excited about and realise these were possible areas for growth.”
Moutter identifies five highlights of his time steering Telecom and then Spark. These are besides the fundamental performance of the business, he says. Top of his list is how the people who were at Telecom when he arrived responded to the challenge of turning the business around.
Most turnarounds start with everyone getting thrown out, he says. “I didn’t tip them all out. We managed to bring the vast majority of people who lived through the turnaround with us. Many were part of that business that wasn’t going well and had lost its way with New Zealanders. They responded strongly to the leadership, and the desire to deliver on the purpose of the company, which is to help all of New Zealand win big in a digital world. They did an amazing job. That, in turn, has encouraged a lot of new talent to join the business.”
Moutter’s second highlight is Spark’s return to leadership in mobile. He says the technology shapes the consumer view of a telco’s competency, level of innovation, and worldliness. He says Telecom was a very distant second to Vodafone but Spark is now seen as equal first. This gave the company a lot of its new-found confidence.
Brands are another highlight, especially the move from Telecom to Spark.
He says: “I have often cited this as the biggest decision I’ve made in my career or will make. It was a big call. It was received with abuse and disbelief. The collective view of the community was that it was a stupid idea and a waste of money. Yet we pressed on and today the Spark brand is materially better positioned than the old Telecom brand.
“And we’ve supported it with a number of new brands like Skinny and Lightbox. There are speciality brands like Revera and CCL (Computer Concepts Ltd) too. The company is now a multi-brand business. We have a portfolio of really strong brands. In 2012, we were Telecom and Gen-i.”
The fourth highlight is the growth of Spark’s digital services business. Moutter says most observers said the odds were stacked against Spark in this sector. Yet, he says, the company has built meaningful positions in cloud computing, cyber security, analytics and media streaming. Today, these businesses generate $400 to $500 million a year. They didn’t exist in 2012.
Moutter’s fifth highlight is a little more personal. He says that part of the early work when Spark was re-setting its business was to go looking at other businesses around the world.
“We wanted to understand how they succeeded in these new territories,” he says. At the time, the talk among Telecom’s executives was about wondering if anyone would ever want to come to New Zealand and see what the company achieved. In the last six months, around a dozen large companies have beaten a path to Spark’s headquarters to learn more about its transformation.
One other characteristic of Moutter’s time at Spark is how the business has a renewed focus on New Zealand. He says that early on during his time a clear commitment was made to putting all the company’s resources into New Zealand. This meant divesting itself of its overseas assets and reinvesting the money here, in technology and building the mobile network.
A less visible aspect of this was to focus on local hiring. The company deliberately moved to either hiring in New Zealand or to hiring overseas New Zealanders wanting to return home.