Simon Moutter: The right stuff to lead Telecom?
"Why not move on? Let's judge Moutter by his actions, staff reactions and TNZ short- and long-term results."Featured comment
Simon Moutter started as Telecom CEO this week. Does he have what it takes to reinvent the company in its post-Chorus era?
“He may not be the visionary CEO with game-changing plans," says Peter Griffin, who frequently dealt with Mr Moutter while Herald technology editor last decade.
"But with Telecom likely to go through more pain, trimming of headcount and re-organisation, his brute-force approach to pushing through changes while prioritising efficiency may be what Telecom needs in the post-Reynolds period."
Ex-CEO Theresa Gattung told NBR ONLINE her right-hand man was plenty creative during his first tour of duty with the company (1999-2008, most of it as chief operating officer).
She told NBR he deserves full credit – or at least co-credit – for a couple of the company's more innovative moves (keep reading).
But you don't have to go far to find those who see Mr Moutter as Ms Gattung's operationally-focused, bristly enforcer.
“Simon was the hard man of Telecom,” Telecommunications Users Association CEO Paul Brislen told NBR.
“Certainly he took no nonsense from junior reporters,” says Mr Brislen, who was a tech writer at the Herald, then Computerworld, during Mr Moutter's time as COO.
Adds Mr Griffin, “Innovation wasn't Telecom's strong point during this period, either.”
A typical reader comment was that the company should prepare for some slash-and-burn with Mr Moutter’s return.
Preserving fortress Telecom
"At first blush, Moutter as CEO of Telecom seems like a regressive move,” Mr Griffin says.
"He was for years the lieutenant to a CEO who was intent on preserving fortress Telecom and he served Theresa Gattung in this role with relish.
"Mr Moutter was fond of telling journalists how heavy-handed regulation in his previous industry, electricity, hadn't been effective and nor would it be for telecommunications.
Failed to read signs
"In that respect, I supposed his delay and defer tactics served Telecom well when it came to maximising profits, but like Gattung, he failed to pick up on how the government's increasing displeasure with Telecom would translate into regulatory action and when the change came it floored them all,” Mr Griffin says.
Ms Gattung told NBR that everyone on the Telecom executive team "saw separation as the ultimate end game."
Nevertheless, the actual news of separation in 2007, does seem to have floored Mr Moutter, or at least provoked a strong response to the operational separation of Telecom (a precursor to the full structural separation of Telecom and Chorus, finalised in November last year).
In her autobiography, Bird on a Wire, Theresa Gattung writes that he had one of the stronger, more emotional reactions to the decision.
Of the day the news broke, she wrote:
"I flew to Auckland and together with my general manager Kevin Kenrick [recently appointed TVNZ CEO], the team met in Simon Moutter’s office.
"Simon was in a bad way.
"He felt very upset about what had happened and very let down about his sense of purpose and belief in the business."
Mr Moutter's disillusionment with the government ruled him out of the top job when she left in 2007, Ms Gattung implies. In Wire, she writes:
"I took succession planning seriously and over several years developed nurtured two internal candidates: Marko Bogieovsky, chief financial officer [now CEO of Infratil] and Simon Moutter, chief operating officer.
"However, as things turned out, when the then board chose a strategy of complete capitulation to the government, neither of them was suited to the job."
Three big moves
Is the operationally-focussed hard man image fair?
In Bird on a Wire, Ms Gattung credits Moutter with political savvy, especially in terms of the company's (unsuccessful) bid to make a preemptive bid to separate on its own terms. She writes.
Simon thought there needed to be a circuit breaker to change the whole nature of the conversation with the government.
“Simon was the consummate chief operating officer,” she she told NBR soon after Mr Moutter's appointment was announced.
“And chief operating officer is not just about focusing on costs.”
The former Telecom boss said Mr Moutter played a key role in three of the company’s better moves. She ticked off:
“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.”
ABOVE: Auckland International Airport 5-year NZX performance (courtesy S&P Capital IQ; click to zoom). Moutter joined in July 2008 as the airport reeled from the GFC, and a politically botched bid to bring in foreign investors.
Ms Gattung says the pair kept in close contact.
But she does not actively follow the telco industry, and even if she did she did, he would not need her advice. Mr Moutter had proved his chops as a CEO both before Telecom (at Powerco) and after at Auckland International Airport, which she rates a success.
Mr Griffin agrees. "Moutter's post-Telecom career has been undoubtedly successful and he is an engaging, pragmatic and well-respected business leader," the Science Media Centre head told NBR.
Analysts are quick to praise Moutter’s time at the Auckland Airport. "I hear only good things about his time at AIA," Forsyth Barr's Guy Hallwright told NBR.
The Telecom man arrived in July 2008 at the airport's share price was taking a battering from the GFC, and a politically botched bid to draw in foreign investors.
Since then, solid results have seen its shares rise steadily under Mr Moutter.
He maintained his reputation for sweating assets, nixing plans for a new runway that would have cost $300 million.
But he was also a builder, expanding retail and car park operations, investing in other airports and creating a new team to lure new airline buiness. China Southern Airlines, Hawaiian Airlines and Garuda have all added routes to Auckland.
Ms Gattung says customer experience at the airport has improved. Your bag is now often waiting for you by the time you reach the carousel. Most travellers would agree that it now seems a more tightly-run, user-friendly operation.
The turnaround has been by no magical. Auckland Airport shares are still well off their pre-GFC high, there are grumbles out the cost of upgrading the (Auckland Airport-owned) Queenstown Airport and one off the new routes (Continental's Auckland-Houston flights) stalled before take-off. But his time there has cemented Mr Moutter's reputation as a safe pair of hands.
ABOVE: Telecomt 5-year NZX performance (courtesy S&P Capital IQ; click to zoom). Arrow indicates point of Chorus split.
Some have wondered how Mr Moutter will perform in his first major role after positions at three monopolies (Powerco, Telecom and Auckland Airport).
And Ms Gattung notes that with Chorus spun-off and Telecom now in a competitive retail market, he returns to a company in a very different situation.
With its network monopoly gone, Telecom is on a level playing field with Vodafone and TelstraClear. And quickening convergence between telecommunications, television and IT is changing the face of the industry, she notes.
Analysts don't see any strategic surprises, however.
Mr Moutter’s time as CEO was “a period characterised by cost and capital discipline that was rewarding for shareholders and which we believe is likely to be similar to 2012-14 due to a cyclical decline in capex and renewed focus on cost reduction,” Deutsche Bank’s Geoff Zame said in a typical comment.
He says Mr Moutter's knowledge of the company lets him hit the ground running. The Deutsche Bank analyst expects a focus on mobile and the UFB as Telecom seeks to untangle itself from its traditional landline business.
Says Mr Griffin, "One thing is for sure: Telecom has a lot of work to do on the product front in the world of fibre and the smart phone, so Moutter needs to create a culture that rewards innovation in the face of some pretty stiff competition."
Already there has been change. Telecom Retail chief executive Alan Gourdie – responsible for mobile, landlines, broadband, Sky TV/Tivo partnerships and Telecom's network of stores – quit on the even of Moutter taking the big chair on August 13.
That's likely just the first in a series of shakeups. And if you want someone who knows how to drive through change, Moutter is your man, Mr Griffin says.
The question, though, is will he have the flair and imagination to change the company in the right direction.
NBR requested an inteview with Simon Moutter. Telecom said the new CEO was not available this month.
Telecom CEO salary package: $3.7m ($1.35m cash; short-term bonus up to $750,000 plus up to $600,000 shares; long term bonus: up to $1m in shares each year, not vesting until three years after each grant of shares)
Aug 13, 2012-present: Chief executive, Telecom
2009 - 2012: member of the Racing Board
2008 - 2012: Chief executive, Auckland International Airporport
2002 - 2008: Chief operating officer: Telecom
2000 - 2002: Group general manager network & international, Telecom
1999 - 2000: General manager network delivery, Telecom
1992 - 1999: Chief executive, Powerco
1991 - 1992: Station manager, New Plymouth Power Station, Electricorp Production
1987 - 1990: Managing director, founder of Electrotech Consultants, New Plymouth
1983 - 1987: Electrical engineer, New Plymouth Power Station, Electricity Division, NZ Ministry of Energy
Master of Engineering (ME), Electical and Electronics
University of Canterbury, 1982 – 1984
Bachelor of Science (B.Sc.), Physics
Massey University, 1979 – 1981
Palmerston North Boys' High School, 1973 – 1978