Tex Edwards: I'm sticking with Two Degrees
The founder of New Zealand’s third mobile operator says an off-hand quip has been taken out of hand.
At Telecom’s XT launch, a hot rumour going around the Auckland Town Hall was that Tex Edwards was about to quit 2 Degrees.
Mr Edwards - variously described as “intense”, “quirky”, “charismatic” and “eccentric” - founded the company now known 2 Degrees in the year 2000, drawing on spectrum supplied by the Te Huarahi Tika Trust, and funding provided by Zimbabwe’s Eco-net.
This arrangement seemed an unlikely vehicle to take on Telecom and Vodafone, and drew derision for years. Mr Edwards - a former banker and emerging market strategist - admits to NBR that the delays were at times “embarrassing”.
But as the decade progressed, and the regulatory environment became more amendable to competition, Mr Edwards jettisoned the much-derided Eco-net in favour of a trio of more heavy duty international backers: US telco investor Trilogy International Partners, which came on board in March last year, London-based Communications Venture Partners (CVP and Hong Kong-based General Enterprise Management Services (GEMS). Each of the three took a 25% stake. Hautaki Ltd (Te Huarahi Tika Trust’s trading company) holds 20% and a mix of private investors - including Mr Edwards’ family vehicle, KLR, hold the balance.
According to the Telecom and Gen-i scuttlebutt, Mr Edwards is now about to leave the building.
The rumour had its genesis in Mr Edwards’ comment at an industry event two weeks ago, when he said he would “love to bust another monopoly”. By Mr Edwards’ reckoning, there are many New Zealand industries beyond telecommunications that could benefit from an insurgent competitor pushing for regulatory reform.
Mr Edwards told NBR “[It’s] obviously a compliment that the incumbents would like to see me gone.” However, “I’m happy to confirm that I am not leaving 2 Degrees.
“Having come this far with our network deployment there are still some significant barriers to break down, most notably mobile termination rates.
“Isn’t it amazing that Two Degrees has spent $250m building a mobile network over the past two years and yet we are still unable to end calls or texts on the incumbents’ networks without paying an extortionate monopoly rent to them!”
After years of slog raising capital, and serving as Two Degrees’ only public face, Mr Edwards says its satisfying for the company to gain a professional management team, including chief executive Mike Reynolds (whose previous position was president of Starhub, the company that won the operator’s license for the Singapore government’s fibre-to-the-home network), chief engineer Mike Goss, who has built networks for operators around the world, including Orange in the UK, and chief commercial officer Bill McCabe.
Mr Edwards told NBR that today “there’s still a role for me to support the team”. The founder is currently working as the telco’s regulatory affairs officer, working on efforts to move along Two Degrees’ stalled RMA consents (which are reportedly holding up construction the last quarter of its 395 cell towers in Auckland, Wellington and Christchurch), and liaising with the Commerce Commission in its ongoing investigations into mobile termination and domestic roaming rates.
Mr Edwards adds that he is putting his money where his mouth is, with his family’s investment vehicle, KLR, putting money into the company (taxpayers have, too, through Hautaki receiving a $4 million government grant early in the mobile venture).
Two Degrees Mobile Ltd’s Companies Office filing records a total of 164 million shares outstanding.
London-based Communications Venture Partners,Hong Kong-based General Enterprise Management Services (GEMS), and US-based Trilogy International each old 40.9 million shares.
Hautaki Ltd, which last year paid $US5.4 million to raise its stake from 15% to 20% - implying a private equity value of $US135 million - holds 31.9 million shares.
NZ Communications Trustee Ltd holds 5.4 million and Mr Edwards’ KLR Hong Kong Ltd 4.1 million.
Last week, Two Degrees announced it would launch its 3G mobile service nationwide during August.