Incoming Spark chief executive, Jolie Hodson, spent the last seven years on the management team that led Telecom, a traditional vertically integrated telecommunications company, as it evolved into Spark, a diverse digital services business. Now she is preparing to take it on the next step of what she sees as a journey, she tells Bill Bennett
Jolie Hodson says today’s Spark is very different from the business she joined in 2013. It even has a different name. Back then, Telecom New Zealand and Chorus had recently de-merged. The fibre roll-out was at an early stage and smart phones were still at the start of their spectacular growth trajectory. She says since that time the fibre network has been largely built and the smart-phone is now ubiquitous.
“The organisation has changed. There’s been a re-set of the culture, the cadence, and a shift in mind-set from where we were as an organisation. All that was the first phase of the turnaround,” she says.
“Then there was the re-brand. Re-branding itself doesn’t actually change anything, it’s the things associated with it that matter. We moved into new digital services and we switched to being more of a retail service provider, where we sold the fixed services provided by Chorus.”
Today, Spark is a leaner, more optimistic organisation. Hodson adds that it is also now more aware of its purpose. For a while, after the Chorus de-merger, it was still finding its way in the restructured industry.
Speaking about today’s Spark, Hodson says: “We have a good culture. We’re focused on driving our Agile transformation [the move to a more team-focused way of working]. We’re about nine months through this transformation. We’ve still work to do maturing that, but we’re a long way ahead of where we were when I first joined the organisation.”
Spark’s reboot goes much further than establishing a new brand name and instilling a different management culture. The business has made a deliberate move to offer a broad smorgasbord of digital services along with its more traditional telecommunications services.
Hodson says: “We’ve shifted into leading new paths. There’s our premier Spark Sport service and we’ve taken a strong position on 5G.”
If there is an over-riding theme to where Spark’s digital services fit into the bigger picture, it is what Hodson describes as experiences. She says: “We’re about creating experiences for our customers. Yes, they use our networks, but it is the experience that helps customers, who nowadays live their lives on the run. Most work – and life – gets done on a mobile device these days.”
She says connecting customers with digital services means understanding them and their needs in ways Spark hasn’t done in the past. This isn’t only about knowing individual customers. It’s also about knowing what households and small businesses need.
She says: “We need to know how to create propositions that are meaningful to them. Part of this means getting our IT stack in order. The next era will be all about customer intimacy. It’s about how we best use data and digital to retain the customers that we have.
“We already engage with over half of New Zealand. How do we make sure we are bringing them the services that meet their needs?”
Change is a fact of life in the telecommunications sector. Life never stays still for long. In the time between Hodson being named Spark’s new chief executive and assuming the role, the local industry structure took another lurch when Infratil acquired Spark’s main rival, Vodafone. Then, a few days later, Swedish private equity firm, EQT Infrastructure, launched a take-over of New Zealand’s third largest telco, Vocus Communications. That has since fallen through, but a new offer from another company has been made, showing just how quickly things can change.
Hodson says: “Vodafone will still be a strong competitor. The new ownership will lead to a greater focus on New Zealand and will see more investment. It hasn’t really had the capital to invest in the past.”
“Jason [Paris] has been clear about the changes he needs to make to the company’s culture, cost base and more. I’ve no doubt the new owners will be looking for all of this.”
One expected change that hasn’t happened is a wave of industry consolidation. Hodson says that economics suggest that the industry should consolidate over time. She says one reason for this is that many of the players in the market are there for different reasons, and that because of the wholesale market structure, there are now very few barriers to entry. She says she can’t see a trigger for consolidation in the short term.
She is philosophical about the constant change. “What we do know about the industry is that it will continue to change. What matters for us in the future is how we engage with our customers. What experiences we provide for them and whether they see value in this.”
Spark has added digital services to its portfolio. It is now a retail telecommunications business, but that’s not the whole story.
Hodson says: “We’re a broad digital services provider. We are in sports content. We are in the cloud business.”
But there’s another side to the organisation. The industry restructure that saw Chorus de-merge and turn Spark into a fibre retailer left the company’s mobile business intact. In fact, at the time of the de-merger, Spark’s mobile business was runner-up to Vodafone’s. Today the two are on level pegging.
Hodson says: “One misconception is that we don’t own infrastructure. We do. We own the mobile networks. We own the data centres that support our cloud businesses. There are a few thousand kilometres of fibre, as well as a transport network throughout the country, and we own 1300 cell towers.”
She also mentions the international cables, some 30-odd exchanges and the large central exchange on Auckland’s Mayoral Drive.
She says New Zealand needs great infrastructure. As New Zealand’s largest locally focused telco, Spark needs to make sure it is making the right investment choices. The company spends $400 million a year on capital investment and all of that is spent in New Zealand.
Hodson says Spark will continue to own infrastructure where it makes commercial sense. One area where this makes a lot of commercial sense is mobile and wireless.
She says: “In the fixed world we are a reseller. We’re still looking to provide a great experience for our customers, but there’s no doubt there is a difference in the margin and the way the economics work. But that’s the world we have. We have to deal with the hand we’ve been dealt. We have to focus on what we can do to influence and change how we serve our customers there.”
One word that hasn’t normally come up in conversations with telecommunications companies in the past is sustainability. She says this is an important part of her vision for the company. Hodson talks about Spark’s wider contribution to New Zealand. Take digital inclusion, the company plans to break down barriers. “How do we help people who don’t have access to broadband? It is a critical part of contributing to and living in society,” she says.
Then there is the future of work and skills transference. Hodson says it’s a focus inside the company but that Spark hopes to extend that outside the company over time. She says this is in line with the government’s agenda and that of the wider business community.
Lastly, she talks about environmental impact. In particular she singles out reducing energy usage. Hodson says Spark is committed to making a difference for New Zealand beyond a simple commercial return.