Interview by Alastair Thompson for Scoop and Digitl.co.nz
Scoop Editor Alastair Thompson recently sat down with Telecom CEO Simon Moutter to talk at length about the business of Telecom, covering its role as an enabler of innovation in an increasingly connected world; the regulatory environment that Telecom faces; internal transformation at Telecom; and the future expected path for Telecom pricing and services.
In Part Four Simon and Alastair discuss how Telecom has transformed itself over the past two years since structural separation from Chorus.
Telecom’s capacity to change since becoming a telecommunications retailer only in 2012 surprised year-long chief executive Simon Moutter.
Since devolving its network services business to Chorus, Telecom had to downsize rapidly says Moutter, who was previously the company’s chief operating officer before leaving to head Auckland International Airport in 2008.
“We had to meet the market on price, which we dropped fast to provide more value to customers,” he says. “To return to profitability we had to drop our cost structure as well.”
On reflection, Moutter feels the heavily media-reported shedding of more than 1000 staff has been carried out fast than slow.
“I’d say there is more collateral damage, stress and strain when you make elongated cuts,” he says.
“In the end, it was something we had to do. People want to move through it and then to re-establish certainty. Given the choice, I believe it is better to move boldly and quickly and get back to a position of confidence more quickly.”
What is more, the drop in staff numbers over a few months has “not seen us drop the ball or lose market share at the same time,” Moutter says.
Internet now central to Telecom NZ
Part of the change in the whole telecommunications scene while Moutter left and returned is that the internet has become the network. Previously, based on dedicated phone lines, the internet used to be a thing off to the side.
As what is now a services-oriented company, Telecom is now very mobile-centric says Moutter.
“We’re very much focused on communications, entertainment and IT services, compared to building fibre networks,” he says. “We’re also responding to the way people use the networks, including upstream services.”
Telecom’ football play
Telecom’s recent addition of a link to English football games is very much part of this response.
“We’re increasingly looking at more upstream services that people might want,” he says.
Another part of the new Telecom is its Digital Ventures strategy, essentially an internal destruction.
The company’s aim is to have at least half a dozen new $50 million businesses, many of which will by definition take away business from the parent.
“It’s a disruptive strategy, also known as eating your own children,” says Moutter. An example is the cheap and cheerful ‘Skinny’ mobile phone brand.
Dealing with inertia
“Telecom’s a very large encumbered business, with a brand that’s heavy, stuck around a particular architecture,” he says. “The ability to change at speed is low. There’s too much inertia, we’ve accepted that as a reality.”
By having new brands and businesses off to the side of Telecom with a much narrower product set and scope, “they can move much more quickly.”
Moutter says that Digital Ventures head Rod Snodgrass has an unfettered mandate to set up any type of unit he wants.
“Hire young people, take your own approach, build your own profitable revenue based on new services and upstream applications is what we’ve told him,” says Moutter.