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Has Simon Moutter had the right stuff to lead Telecom, or has he stuffed it?

Back in August 2012, as he became CEO, I asked "Simon Moutter: The right stuff to lead Telecom?" 

His company's king-hit 4G spectrum bid this week provides an opportune moment to assess his first 18 months on the job overall, and ask if he has had the right stuff, or whether he's stuffed it.

The winning $83 million bid (the reserve was $22 million), in part reflects the differences between Telecom [NZX:TEL] and its chief rival. Vodafone NZ is part of a multinational with much deeper pockets, but Moutter and his management team only had to convince their board, not layers of regional management (Vodafone can point out it still owns a third more spectrum, but obviously it was not keen for Telecom to close the gap as round-after-round of bid and counter-bid in $1 million increments).

In part it reflects the new Telecom boss's appreciation of the importance of 4G (which will be no surprise to NBR readers. Asked about the importance of the spectrum during a November 2012 Keallhauled session, he said, "It's reasonably inevitable that New Zealand market revenue will continue to bias towards mobile and mobile will get bigger than fixed. That's happening everywhere else in the world and it won't be any different here. Mobile revenue will dominate. We've barely started."

But it also reflects Moutter's aggressive style.

If you look at the past 12-months, there's an obvious pattern of Moutter being decisive, and going on the front foot. 

Science Media Centre manager and technology commentator Peter Griffin frequently dealt with Moutter during his first tour of duty (1999-2008, most of it as chief operating officer). Back in August 2012, he told me:

“[Moutter] may not be the visionary CEO with game-changing plans. But with Telecom likely to go through more pain, trimming of head count and re-organisation, his brute-force approach to pushing through changes while prioritising efficiency may be what Telecom needs in the post-Reynolds period."

And we've certainly seen that brute force approach. Earlier this year, Telecom laid off up to 1230 staff in a single sweep of its ongoing restructure (the company had more than 7000 employees as Moutter took control). 

Getting laid off is always horrid for all concerned, of course, but Moutter's rip-the-bandaid-off approach at least didn't lead to any drawn-out period of uncertainty. Orion Health boss Ian McCrae noted that dumped Telecom staff were at least entering an IT jobs market defined by a shortage of staff (if not rich in well-paid middle management jobs, as NZICT's Candace Kinser added). And it does not seem to have affected market performance. Telecom has made modest gains in the model and retail broadband markets since.

And there's been more culling. The Moutter era has seen Telecom's services division, Gen-i, withdraw from Australia and, last month, Telecom sell its AAPT division.

Again, some layoffs were involved. But after years of dithering, there was a finally a black-and-white answer to whether Telecom's under-performing Aussie operations should go hard or go gome. And the sale of AAPT for $A450 million ($NZ486 million) but some more cash in the kitty.

So as predicted, Moutter can destroy, and do it in decisive fashion. Can he also build.

During his first tour of duty at Telecom, Moutter was wide seen as Theresa Gattung's enforcer - the cost-controller and axe-wielder during a time that didn't see a lot of innovation. 

But when I spoke to Gattung shortly after Moutter was appointed CEO (following a golden run as Auckland Airport chief executive) she said that was unfair. The former boss credited Moutter with a role in three of Telecom's better moves during the 2000s.

“And chief operating officer is not just about focusing on costs,” she said. (And yes, this is how she spoke, in human PowerPoint fashion):

“He was instrumental in terms of working with Kevin Kenrick [now TVNZ CEO] to turn around mobile.

“He was instrumental in our decision to purchase Gen-i [Eric Watson’s IT services business, in 2004, beating Datacom] which was very successful.

“He was instrumental in our decision to sell the Yellow Pages because we thought the business had peaked and everybody would be on Google.”

Fourthly, she also said Moutter was instrumental in a Telecom plan to organisationally separate itself, putting Chorus at arm's length, before the government leapt in (in the event, Telecom's in-house scheme was preempted by Labour's move - under then ICT Minister David Cunliffe - to organisationally separate the company, which of course was followed by National's more interventionist move to structurally separate Telecom with Chorus' spin-off into a separate company in preparation for the UFB).

Gattung's theory about Moutter haviing a big of creative flair - or at least the nous to back those who do - has been backed up by events such as slashing Aussie roaming to a flat daily rate (with more of a shock-and-awe approach than a regulatory that demanded), rolling out a nationwide phone box wi-fi network (a brilliant move, in my book), and the pending launch of the no data-cap ISP Big Pipe.

Moutter gets it. He's got a blunt appreciation that modern telecommunications are all about the data, and what this means for competition. But he's got an equally blunt pragmatic streak (Telecom's UFB plans launched without a voice-over-fibre product. Overall, the company's UFB push has been a bit colourless, but it will be interesting to see what value-added services Telecom Digital Ventures brings to the table this year in areas like home automation, home security and, maybe, content).

With restructuring costs and repositioning, it's hard to give a verdict on Moutter's commercial performance yet (Telecom's full-year 2013 earnings, reported August 23, were toward the bottom of guidance; its first-half FY2014 results will be reported next month).

The answer to the question, Does Simon Moutter have the right stuff still hangs in the balance.

But for now, I'm leaning toward "probably".

ckeall@nbr.co.nz

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Comments and questions
8

Moutter is good as a hatchet man, but has limited creativity for expansion.

A lot of the good staff left with redundancy but the worst offending senior managers are still there. This means their re-engineering projects are a mess of changing PMs and other staff as these same managers who caused the initial strife are in charge of fixing it. Sold my telecom shares.

Utter Clap trap - redundancies are still rolling and more restructures are in the pipe line for all of 2014. The staff are exhausted, overworked and never quite sure if and when their number is up.
Mr Moutter stood in front of us this time in 2013 and said it would be one massive sweep then getting on with it.
This is not the case.

Telecom's looking a lot like a bride shedding weight to fit into the dress ahead of her big wedding.

Telecom is a company that has a Mission and Vision that is unclear.
Curretnly its only a pipe provider and services is something that just happens.
Its about time Teleocm set itself as a leader or follower, rather than being reactive.

but behind all this remains the elephant in the room - diabolical service

We're so focussed on shrinking our business. The only strategy for holding market share is cutting margin. Hardly revolutionary stuff.

I thought one of the previous re-structures to be product led was a great idea, but poorly executed, ultimately destroyed by internal politics/egos. I couldn't make sense of the new org chart - too complex. Telecom needs to realise that in a global context it's just a small telco, and it needs to engineer itself along those lines, rather than maintaining its 'big fish' mentality. NZ depends upon Telecom succeeding. Re-engineering programme needs a new GM to lead rather than just manage.