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Quin becomes acting Telecom CEO, interim Gen-i boss named

UPDATE May 31: Chris Quin may have missed out on the big chair, but the Gen-i boss will get to be acting Telecom CEO, starting tomorrow.

Mr Quin will fill the chief executive role from June 1 until new CEO Simon Moutter's arrival on September 1.

Paul Reynolds will depart on June 30, as scheduled, following a cross-over month with Mr Quin.

In turn, Greg Mikkelsen has been named acting CEO of the Geni-i.

Mr Mikkelsen is general manager for enterprise clients at the Telecom IT and services division. Previous roles have included head of enterprise trans-Tasman sales for Gen-i, and head of business for Telecom.

Earlier, Mr Quin told NBR ONLINE that Telecom would "not be standing still" until September 1.

He would be talking frequently with Mr Moutter. Projects include completing Telecom’s business planning for its next financial year.

On April 24, Mr Quin said he was disappointed to have missed out on the top job, but strongly endorsed Mr Moutter.

A third declared candidate, Telecom Retail head Alan Gourdie, could not be reached for comment.

With his solid finanancial record growing Gen-i, and his personal role fronting to media and customers during during the XT crisis, many saw Mr Quin as a serious contender.

There has been inevitable speculation that passed-over candidates could leave Telecom.

On this point Mr Quin told NBR he had let staff know, "I’m totally focused on Gen-i.”

The division would play a key role in Telecom’s growth, he told staff.

In the past, some passed over for the top job have walked - notably Marko Bogoievski (now head of Infratil) and Mr Moutter. Both lost out to BT's Paul Reynolds in 2008 (Mr Moutter after a three-month stint as acting CEO).

Forsyth Barr research director Guy Hallwright said Telecom needed group leaders who could drive customer relationships. Mr Quin was strong in this area.

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'Theresa Gattung's right-hand man' to lead Telecom

UPDATE APRIL 23: Forsyth Barr research director Guy Hallwright has given new Telecom CEO Simon Moutter a cautious thumbs up.

"He was a pretty solid executive in the days when he was at Telecom - mainly on the network, operational side - and he appears to have done a good job at AIA [Auckland International Airport]. I hear only good things about him at AIA."

Deutsche Bank research analyst Geoff Zame said Mr Moutter's familiarity with the company, including many staff still around from the Theresa Gattung era, meant he could "hit the ground running, providing comfort to shareholders that progress in key area's can be maintained and accelerated."

LATEST: Telecom's new boss seen as hard man

Mr Zame said Mr Moutter's reign as Telecom chief operating officer (2006 - 2008) "was a period characterised by cost and capital discipline that was rewarding for shareholders and which we believe is likely to be similar to 2012-2014 due to a cyclical decline in capex and renewed focus on cost reduction."

Deutsche Bank is not expecting any surprises from the new Telecom boss.

"We expect the central planks of any new strategy to incorporate mobile and UFB - which arguably provides Telecom with the opportunity to untangle itself from its legacy PSTN [traditional voice line] products."

Forsyth Barr maintains its hold rating on Telecom, primarily because of the recent run up in its shares, Mr Hallwright said this afternoon.

Deutsche Bank also retained its hold ranting.


Telecom's board has passed over at least one internal candidate to appoint Simon Moutter as chief executive and managing director of Telecom, effective from September 1.

Mr Moutter was talked up by a Telecom insider in an NBR list of contenders published December 15 last year, but was not widely tipped for the role.

He has previously held senior positions at the company, including chief operating officer under former CEO Theresa Gattung.

Although the dot.com bust and regulatory changes contributed to the multi-billion dollar market cap meltdown under the Gattung regime, the CEO and her leadership team were also criticised by some commentators for failing to anticipate the government's resolve to push through regulatory changes, mis-steps in the mobile market, an aimless alliance with Microsoft's MSN, and over-paying for assets across the Tasman.

Mr Moutter left to become CEO of Auckland International Airport (AIA) in 2008 after being passed over for Telecom's top job in favour of external candidate Paul Reynolds.

Mr Moutter did serve as acting Telecom CEO in the three months between Ms Gattung's departure and Mr Reynolds' arrival.

Auckland Airport has delivered solid financial performance under the ex-Telecom man (see below, and charts above), bouncing back after a bid by the Canadian Pension Plan to take a 40% stake in the airport - initially supported by the airport's board - collapsed in the face of a hostile political reaction that saw the deal blocked by the then Labour government.

Telecom shares [NZX:TEL] were up 0.2% in early trading today after the pre-market announcement. Auckland Airport [NZX:AIA] was down 0.4%.

The missed outs and the maybes
Mr Moutter beat at least one inhouse candidate - head of retail, Alan Gourdie - the only contender to confirm, via NBR, that he was making a run at the top job.

NBR understands Gen-i services division boss Chris Quin was a second inhouse contender. He would not comment.

Mr Quin was seen as making his bones during the XT crisis as he repeatedly fronted to media and customers.

Telecom's extended "global" CEO search began last year, and appears to have seen the company canvasing a variety of potential candidates.

A trusted source inside the company told NBR ONLINE that departing Air New Zealand CEO Rob Fyfe visited Telecom twice for meetings, and on a third occassion met senior Telecom figures at a cafe.

Shortly after, on February 24, Mr Fyfe told media he had no interest in the position.

And a person close to departing NZX CEO Mark Weldon told NBR ONLINE that Mr Weldon had been approached about a senior role at Telecom.

Mr Weldon said he was still assessing what direction he wanted to take after leaving the local stock exchange.

'Theresa Gattuing's right-hand man'
"Simon's got a huge job ahead of him in terms of positioning Telecom in the new market," Telecommunications Users Association chief executive Paul Brislen told NBR ONLINE. 

"He's got to sort out staffing levels, which are far higher than comparable businesses; he's got the UFB migration to consider; and he's got to shake off the image of being Theresa Gattung's right hand man for all those years," he said.

"But Simon proved he can handle himself at Auckland Airport and has done a tremendous job there. We look forward to working with him."

CEO remuneration
Mr Moutter's remuneration will be below that of his predecessor, Paul Reynolds, whose compensation famously topped $5 million - but adjust for the Chorus demerger, which saw roughly half the company spun-off, it is in the same ballpark.

The new CEO will receive:

  • A base salary of $1.35 million.
  • An  annual short term performance incentive of $750,000 in cash if he meets the targets set by the board.
  • and shares to the value of $600,000 for achievement of those targets, with the shares received as part of this performance incentive restricted from sale for two years.
  • Mr Moutter will also be eligible for $1m in share rights annually, as his long-term incentive.
  • The new CEO will also receive a one-off grant of share rights on commencement with a value of $750,000.

"The vesting of these share rights will typically not occur until three years after they have been granted, and vesting is subject to meeting financial and shareholder return performance hurdles to be determined by the board," chairman Mark Verbiest said.

In all cases, the performance targets will be closely aligned to the delivery of shareholder value.

“This package represents the market rate for a CEO position of this magnitude,” Mr Verbiest said.

“While Telecom is a smaller company than it was following the Chorus demerger, it retains a significant level of scale, challenge and complexity and the package reflects that.

"Telecom is  the largest listed company by market capitalisation on the NZX.

“If challenging performance targets are met then Simon will be rewarded appropriately, in a manner that is closely aligned with shareholder value.

"As such, the majority of Simon’s remuneration package is at risk, with a high proportion of incentives paid in shares.”

This grant vests in two tranches - the first half after 12 months and the second half after 24 months. 

Board: proven his worth at airport
“Simon’s knowledge of the telecommunications industry in New Zealand is strong and deep, and he is a proven CEO of a significant listed organisation,” Mr Verbiest said. 

“He has also demonstrated that he can deliver growth in a challenging environment by transforming the customer experience at Auckland International Airport.

“It is also pleasing that the best candidate for the job has been shown to be a New Zealander," he said.

“He was instrumental in the transformation of Telecom in the early 2000s, where the company pushed strongly into the IT services sector with the acquisition and expansion of Gen-i, the turnaround of Telecom mobile, and the roll-out of nation-wide broadband services.”

“He has also led the transformation of Auckland International Airport, which has significantly improved the international traveller experience as well as growing customer numbers [and] significantly growing revenues from non-airport business."

Auckland Airport performance
On February 29, Auckland Airport has announced a profit after tax of $69.1 million for the six month period ended December 31, 2011, up 5.5% during the same period in the previous year, with underlying profit after tax up 15% to $70.8 million.

Total revenue of $215.9 million was up 8.9% on the previous corresponding period, while expenses rose by 15.3% to $54.5 million.

A 2010 expansion drive saw Auckland Airport bjy a 25% stake in Queenstown Airport for $28 million, and a 24.5% stake in North Queensland Aiport (operator of the Cairns and Mackay airports for $A132 million).


Simon Moutter CV

2008-present: Chief executive officer, Auckland Airport

2006-08: Chief operating officer (business) – Telecom; including three-month stint as acting CEO between Theresa Gattung's departure and Paul Reynolds' arrival

2002-06: Chief Operating Officer – Telecom NZ

2000-02: Group general manager network & amp; International – Telecom NZ

1999-2000: General manager network delivery – Telecom NZ

1992-99: Chief executive – Powerco

1991-92: Station manager – New Plymouth Power Station

1987-90: Managing director/owner – Electrotech Consultants

1983-87: Electrical engineer, Electricity Division – NZ Ministry of Energy
 

More by Chris Keall

Comments and questions
41

Just the man for the job. He did an excellent job of giving AIAL vision after the upheavals from failed takeover offers in 2007 and 2008.

He will likewise give Telecom vision after the big upheavals from the demerger last year.

Congratulations to him.

Of course it remains to be seen how he goes leading a company that isn't a monopoly.

Isn't a monopoly?!?!?! Chorus and Telecom havn't divorced, havn't really split up ... just sleeping in different bed. Telecom and Chorus (for all real intents and purposes) are still very much married.

I'm sure he will do exceedingly well ...

Monied Moutter will wring the profits outta Telecom. I mean, the guy removed metered curbside parking at the airport -- policed by fluoroescent-vested Nazi wardens -- forcing drivers to go into the Parking Lots, which allowed for a measley 10-minute grace period.

Moutter was COO during the terrible years, and is now appointed CEO by a board chairman who was Group General Counsel in those same years.

This isn't a signal for change.

Chorus is where the long term value is in this equation.

Poor Rob.

I guess Telecom preferred someone with a track record of success.

I feel for Simon. As capable as he is (and his track record to date indicates he is a very capable operator), he faces some pretty tough challenges.

1) Telecoms bread and butter, landline rental and calling is undergoing significant erosion. At present this is driven by competition and mobile. Shortly as UFB fibre becomes more commonplace, VOIP will further trash calling revenues beyond repair and to date Telecom has no VOIP solution

2) Broadband is devaluing rapidly as ISPs upsize allowances without big increases in prices, and competitors are doing a far better sales job via bundling and other added value offers than Telecom. In short Moutter will have to make some pretty extreme changes to stem the market share losses.

3) Telecom has to invest some serious cash into XT for LTE to happen if they are to stay competitive. At the same time the need to de-comission CDMA to free up spectrum. Either way large amounts of funds are required for what is at best an uncertain return on investment as 2Degrees and other players devalue the mobile market.

One thing no one has mentioned is that mouters appointment could also see Telecom drawing greater regulator attention too, which is something Telecom needs like a hole in the head

Hopefully Mouter is smart enough to clean out the 12 layers of middle management so the people who do the real work (and generate actual income for the business) can just get on with their jobs without all of the bullshit politicking that goes on in this company. I also hope he takes a long hard look at Telecoms HR people.

The near constant restructuring is killing internal morale, creating sabouteurs and forcing Telecom into endless cycles of process reviews and repairs

Clearly Telecom needs to start adding value to offset declining revenues. Trouble is they are lousy at doing this (ask any telecom employee about the 35,000 plus Tivos sitting in a warehouse in Auckland or any companies that have tried to engage with Telecom)

Good luck Simon.

Dear Telecom Board

There's nothing quite as effective in stifling the aspirational ambitions of your so-called 'top talent' -- by ruthlessly quashing morale and signalling a return to the Bad Ol' Days -- than recalling a member of the Old Guard.

Moutter famously once refused to look at a screen shot of the Telecom website because it contradicted his bald-faced lies about the cost of broadband in New Zealand. If he's changed his tune it will be a miracle.

Chorus and Telecom havn't divorced, havn't really split up ... just sleeping in different bed. Telecom and Chorus (for all real intents and purposes) are still very much married. Telecom and Chorus (for all real intents and purposes) are still very much married.

How do you figure that Anonymous, when the companies are (i) completely separate legal entities and (ii) the MED and ComCom have a whole regulatory regime in place to ensure that this separation is maintained?

Are you saying that these agencies are in cahoots with Telecom and Chorus, actively engaged in deceiving the NZ public?

That's quite a claim.

Thank god they did not hire Fyfe. With his proven lack of commercial accumen (see AIR share price) the TEL share price would be in the toilet in 10 min and the Telecom would be taken over, and bye bye our largest listed company.

Sadly you miss what Rob Fyfe has done for Air NZ. Changed an airline to be world class, their long haul product is stunning which you would realise if you ever used it.

You have travelled overseas haven't you? And no I don't mean from Timaru to Wellington!

From Timaru to Wellington isnot a world class product and neither is sitting in a shockingly configured 777-300 that offers only crappy pink lighting and back pain

Air New Zealand, world class!!! hahahahahaha...oh, in the 60-70 countries I have travelled too, I have to respectfully disagree. Just because you call yourself 'world class' (which, by the way, every company in NZ seemed to be doing at the moment) doesn't make it so, neither do insider awards. Making a good profit does however, hmmmm....

Only COE of the year!
Could the share price reflect the industry not the COE?

Good response Andrew B

Few other candidates for the role would have had to overcome the 'Gattung' legacy that he carries. Either the Board or Moutter himself obviously have no idea what that implies, but it's a hurdle. The company did not distinguish itself internally or externally in 'his' time. The Telecom of today is a retailer now - that's it. It probably IS too big and carrying too much weight to be as agile as it needs to be. There are no natural monopolies to be exploited, and no money to be made being 'comfortably second' in any market. It's going to be an interesting run up to Christmas because by then the die will largely be cast. Let's see ...

I think the die is already cast.. I my crystal ball I see layoffs aplenty and slumping profits as years of politics before profit and an out of control middle management team legacy come back to haunt Telecom

Simon IS Teresa Gattung's hand-picked successor?

Just as Teresa was Rod Deane's hand-picked successor?

Well, we all know how Deane sucked up to the Americans and burdened Telecom with debt as he happily ripped NZers off.

Then, Teresa was appointed to screw New Zealanders even more - and made bad strategic decisions all round.

Thing is, the three stooges (Deane, Teresa and Simon) only know how to abuse monopoly situations.

Telecom shareholders, be afraid. Be very very afraid.

Simon is so obviously the wrong man for the job.

Any progeny of Dr. Josef Goebbels Deane assuming the role of Telecom's CEO, would chill anyone.

My thoughts are with the dispirited staff; they must feel crushed.

Telecom had a chance to re-invent itself. They chose to stick with what they knew. I think MBA types (I'm not one of them...) call this defending a burning platform!

Mouter is a monopolist management type,absolutely no experience in highly competitive,deregulated markets.This position needed someone with a successful track record leading a competitive retail telecommunications business.Mouter is a tired hack from the old days,and AIA was just another monopoly.Definitely the wrong choice.Sell your shares.

This guy is great at screwing every last dollar out of customers (and defenceless taxi drivers) and has only "proven himself" in maximising monopoly profits.

It is almost certain he has no idea whatsoever about how to grow the Telecom business but as an old mate of the Chairman he was always likely to get the nod.

“It is also pleasing that the best candidate for the job has been shown to be one of my old mates from New Zealand" - hilarious.

At least Chris Quin had daily contact with customers and some idea of what is needed to win and keep them.

Not a good day for Telecom - back to the grim old days of exploiting and confusing customers. Big problem is that doesn't work any more.

What a golden moment for Moutter. It is almost unheard of for a big coy to have two completely useless and overpaid CEOs on a trot.
Initially no one could believe that the Brogue Rogue could be worse than Gattung. Not possible we all said.
But we were wrong. Equally inept and without any communication skills. He clearly didn't give a damn either....how else could the coy have got to paying nearly every second person more than $100K? And a dirty dozen more than $1-mil each?
You are lucky Simon. 'Cos no one will ever believe that lightning could strike thrice.
Any chance you could get the tens of millions back from the two of them under Consumer legislation? Would make us all feel a lot better.

What a hoot!

Instead of brining in someone with fresh ideas and a new approach in what is a fast moving industry, Telecom's board is bringing back a has-been!

Teresa, Deane and Simon left behind a gigantic mess which was left to a supposedly new board and new CEO o clean up.

The new board looks like it's just part of the old boys' network!

Oh well, back to the future, teletubbies!

AIA = monopoly

Will be interesting to see whether he can operate in a competitive environment. Good luck to him, but I suspect Telecom will eventually become less and less relevant.

Agree re fyfe, air nz is the envy of all other airlines and the only one I travel long haul on.

I think the pay gap between moutter and the average telecom staffer is nothing short of obscene.

Many at Telecom have not had a pay-rise for years and yet are expected to sit tight as incompetent and arrogant execs command pay packets of an astonishing size.

That and having to look over your shoulder and speculate on when the next restructure will happen makes Telecom one place I would strongly reccomend people avoid as an employer

Let's hope that Simon has learnt the lessons on how not to make investment decisions and how to properly grow can operation from Teresa (bubble headed female-for-Helen-era) Gattung and Rod (Americans-know-everything) Deane.

Give the man a chance.

I'm sure he is going to be given a chance but most people posting here are amazed at what looks like a huge step backwards. This guy has a track record of screwing every last cent out of the hapless customers of monopolies and that time was over long ago at Telecom.

I remember a press story from a few years ago about him having a complete meltdown when challenged in a public meeting about poor value and service. I think "you should be grateful you get any kind of service at all" was the gist of his remarks.

I agree completely with Bertie about excessive pay. As many people including me have said many times, noone apart from Telecom would pay any of this lot anything like the amounts they get. If they really believe they are "world class" let them go overseas and prove it.

I don't know why the intense speculation re: Quin - saying sorry heaps of times on tele doesn't make you CEO.

The next Phase for Telecom is intense cost cutting/getting staff numbers inline with competition - and improving how the company operates in general - Moutter will do this well.

If that's why he has been hired it shows a truly pathetic lack of ambition on the part of the TEL board.

You can't grow a business by cutting costs and having yet another restructure. Telecom have restructures and mass sackings every five minutes and look how well it's all going.

Nobody thinks Chris Quin is a genius and maybe he isn't right for the role either - but at least he does know how to deal with customers, and seems to quite like them unlike his new boss.

I am sure Simon Moutter will be great at cuting costs. That is the easy bit. What he seems to lack is vision and ideas.

Eh, what does thou think Telecom has been doing in the last 5 years?

Moutter was a typical arrogant monopolistic Telecom executive.

His stint at Auckland Airport would have convinced him he is shxt-hot and therefore, he can continue to be arrogant.

And all because he manages a MONOPOLY!

Cripes. This makes for depressing reading. Give the guy a chance! The major problem with Telecom is the business structure which results in enormous bureaucracy and duplication, not to mention the nastiness. Simon, prove you are not captured by the Old Guard and clean out the dead wood and the negativity and support the many smart, energetic and hard-working young employees who understand new technology to help reinvent the company.

I would have thought Telecom staff would be relieved the new CEO is not a certain Mr Mark Weldon who is probably looking for another job!!

Yup I'm told Weldon spends most of his time on his own pr and feathering his own nest while working his staff like slaves. No doubt he'll still worm his way into telecom as "Govt Relations Director"...hopefully Moutter will not be duped like the nZX board.

Gatting thinks it is a good appointment....'nuff said. Sell the shares.

Dear anonymous:

Air New Zealand, world class!!! hahahahahaha...oh, in the 60-70 countries I have travelled too, I have to respectfully disagree.

My goodness. I'm not sure you realise how foolish this makes you look trashing AirNZ like this. Perhaps you'd like to put you name to these rants.
Meanwhile I'll put my trust in my own extraordinary AirNZ experiences, and also in the ATW who in February awarded AirNZ the Airline of the Year title for the second time in three years.

Phew *wiping my brow* ... here I was worrying that Rob would have nowhere to go when he leaves. Good on you Lance for arranging a job for him at ATW. He'll still be able to write his own press releases and talk all about himself while the magazine has even fewer readers than the Herald. World class!!

From my experiences, and I'm sure many others, Telecom under Moutter, Gattung and the other management of the time was like living in a Dilbert cartoon. Enduring 'restructures' every 3 months so they could look like they were doing something. Or maybe a re-branding exercise every now and again? Classic was a big restructure for 'operational efficiencies' where they disbanded a whole department and in the process actually created more jobs and more complexity. Good luck Telecom. You'll need it.

Moutter showing some early smarts by avoiding the month cross-over with NZ's biggest 'Lotto' winner -- the Brogue Rogue -- who walked away with +$30-mil when you include all the extras in the Package-of-Packages he conned the recruitment team out of.
That same team have shown themselves to be so totally gormless they could move into Remuneration Consulting in Wall Street.
30 more days of the lame albatross around our necks.

Thank goodness it is not Alan Gourdie - i have seen him in action, everything he touches fails. Cannot believe he even put his hand up for the role - most of telecom wonders what he does and when will he get the boot!