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Simon Moutter: The right stuff to lead Telecom?

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.

Post-Telecom success
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.

Beyond monopolies
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.


Simon Moutter
Age: 52
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)

CV
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

Education

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

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Comments and questions
30

Good reason why NZ stays backwards - Telecom exemplifies everything which was and is wrong with how big businesses operate in this country.

Mr Moutter was only good at Telecom when it had regulatory protection. Once the squeeze comes on, he was like colgate - used and down the drain.

Then, he turns up at Auckland Airport - you guess it, another monopoly with minimal regulatory supervision. So he did there there - big yawn!

Now, it's back to the future for Mr Moutter - one of the gang of three (Ms Gattung and Mr Deane being the other two) who left NZ with one of the most backwards telecommunication infrastructure and with a heavily debt-laden Telecom.

AAPT, CDMA and slow-speed broadband. anyone?

I find any defense of Telecom under Gattung lacking credibility - the results were stark. Selling Yellow pages was smart though.

Why not move on? Let's judge Moutter by his actions, staff reactions and TNZ short- and long-term results.

Moutter was one of the best things that happened to Auckland Airport, considering the trouble and divisions it has in late 2007 (council shareholders, hostile takeovers, an old board).

I expect Moutter to do just as well in charge of Telecom.

Yes, he will certainly take Telecom back to the future.

Absolute disgrace how the three of them (Gattung, Deane and Moutter) systematically dismantled and destroyed what was one of the world's technologically advanced telecommunication companies when it was privatized.

Imagine what the $4 billion+ squandered in their arrogant self-destructing adventures and miscalculations in Australia and CDMA, funding sourced by obscene monopolistic profits from giving NZers sub-standard service, could have one if the funds had been applied to upgrading and improving NZ's telecommunication infrastructure?

Mr Moutter better deliver now that he has been given a second chance to remedy the mess the gang of three made of Telecom and of NZ.

Think of the people out there - Weldon, Fyfe, Liddell - and they went back to the future with Moutter. Opportunity missed?

Good attempt to get to the heart of the Moutter

A bit like Himmler stepping up, after Hitler committed the one-and-only worthwhile act, as leader,

Even years after she has gone the memory of Gattung is enough to turn even the strongest stomach. Seeing again her pathetic attempts to rewrite history in her ludicrous book makes me feel even more ill.

The fact that her incredible talents are not exactly sought-after years after she left Telecom says it all.

BTW Telecom paid over $60m for Gen I. If I were Simon Moutter I'd be keeping quiet about any involvement I had in this. I am sure Eric Watson couldn't believe his luck - this is what happens when naive corporate types encounter a master dealmaker like Mr Watson.

A few bottles of champagne and a ton of flattery never fail. At least it turned out better than the Hanover/Allied Farmers deal.

"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."

A statement which shows the depth of moral and leadership corruption at Telecom.

And they now give him the keys to drive the Telecom car into the ditch again?

Going by the way those Nazi traffic wardens, stood over motorists attempting to drop -off and pick up passengers from the airport, expect to see the black hand of Moutter, take an ice pick to the jugular.

No faith in anyone who carries the vile stench of those Gattung years.

The right stuff comes from doing the right things.

Mr Moutter hasn't got the right stuff as he was Teresa Gattung's right hand boy when horrendous strategic mistakes were made.

It's pathetic how NZ government has to come out with $1.35b to facilitate the rollout of UFB when Telecom blew $2.5 billion buying AAPT in Australia.

Listen carefully - I can still hear the Aussies laughing like well fed hyenas from across the seas.

The way, Auckland Airport policed the traffic at the terminal, Moutter can go and get effed!

When Theresa Gattung "credits" anyone with anything, you just know that person is damned as a jonah.

What is worse is that Telecom has a new Chairman, Mark Verbeist, who was the Corporate Counsel for Telecom in the Gattung years and now we have a CEO from the Gattung team. Telecom is now a retail company with no monopoly to protect its earnings and the need to compete and the fools bring back two people from the regulated past into the most crucial positions? Telecom needs game changing management not more of the past. This shareholder is very nervous but what the heck, the Gattung gang destroyed more value for shareholders than even Hugh Fletcher with FCL so more fool me for still holding any shares.

I am no supporter of Telecom's CEO and COO during that era but a couple of points ought to be made.

According to Theresa Gattung, CDMA was forced on Telecom by the government. Telecom wanted to switch but the public servants who know all and don't own shares said it would be better for competition. Obviously they were wrong.

Should Telecom have anticipated that a Labour-led government led by a desperate and unpopular PM would end up as a political football? A corruption afflicated Helen Clark was always going to blame Telecom to divert attention and raise her popularity. After all the Telecom shareholders were unlikely to vote for her. This move cost the shareholders several billion dollars as the price fell from over $6 to under $2.00. Sure Theresa Gattung opened the door with her remark but any pretense would have been used.

Not true. Telecom was holding NZ to ransom.

CDMA was beaten by GSM fair and square due to the success of GSM rollout globally by the likes of Vodafone. Global roaming with Telecom was a sick and expensive joke.

In return for light handed regulations, there were certain expectations on Telecom. Instead, Telecom spent its whole time frustrating competition and downgrading its services to New Zealanders so that it can maintained high profits. Meanwhile, it blew billions on bad investments which were being recouped from New Zealanders.

It took an assessment by the government of how far NZ had fallen behind the rest of the world on broadband for the government to take decisive regulatory action.

The mistress of spin, Theresa Gattung, is trying to rewrite a disgraceful chapter in Telecom under Rod Deane and her leadership.

I agree Telecom is not well liked but much of what you write is unsubstantiated media puffery. I can only repeat what Theresa Gattung said at an investors meeting. She said that Telecom knew GSM was the way forward but the government had specifically stopped them from adopting it. This point is constantly overlooked.

Telecom's line business was already well regulated before Helen Clark stepped in. Telecom's return on its assets and its profits during this period were not excessive and its profits were trending down due to competition and regulation. I do agree that Telecom hugely overpaid for AAPT during the technology boom - just before Theresa Gattung was appointed CEO. The major fall in Telecom's market capitalisation came much later, after Helen Clark threatened separation of the business for cheap political not good economic reasons.

There are good reasons why we were behind in broadband and still are - for instance, a sparse population and difficult terrain. You could have had a world leading service, even back then by getting a dedicated line to your house - but it would have been and still is expensive.

Companies need capital to introduce new technology and unless they can earn sufficient profits they will not get support from investors. A government is unwise to force a listed public company to invest in a project unless they are willing to supply capital and take control. Nothing puts off foreign investment like government's seizing private assets - as in Putin's Russia.

Independent verification of Teresa Gattung's spin that CDMA was forced upon Telecom?

At the time Theresa Gattung spoke to investor meetings held around the country. It appeared to be from a prepared script and it would have been career suicide and a scandal to have lied to her shareholders. All I can say is that I took her word and the government never held a media briefing to say her version was wrong. At the time Theresa was Helen's golden girl - showed women could run the country, the justice system, and the country's largest listed company. I am sure you could track down another independent source besides the management team at the time, the stock brokers, and the hundreds of investors who heard her.

The minister of the day told Telecom it couldn't buy all the available spectrum and it had to settle on one lot or the other.

Telecom complained that it wanted all the spectrum on offer so it could decide whether or not to go with CDMA or GSM. The Minister said "figure it out" and Telecom went with CDMA, giving up the so-called "GSM spectrum" which went to BellSouth which was bought by Vodafone which promptly kicked Telecom's butt.

There is no truth to the "government forced Telecom to go with CDMA" lie and it's high time Telecom apologists stopped trotting it out.

I have merely repeated what Ms Gattung told a group of investors. I was at the meeting and can write from personal experience. It surprised me because I expected Telecom would have switched to GSM because of its more general acceptance.

Dear "No name supplied", were you told that in person by the Minister himself? Were you at a meeting or a press conference where that was announced? You have not supplied any evidence of the source of your statement. There may be a grain of truth in what you claim but at least supply some context for your claim,

When the Telecom CEO tells a group of investors the company was forced to go with CDMA by govt bureaucrats then who do you believe? No one at the meeting questioned her. The reason she gave was that the government wanted to foster competition and believed that having two competing technologies were the way to go. They would not allow Telecom to compete head to head with the GSM system run by the predecessor to .Vodaphone. I guess that would be from fear that Telecom would drive the competitor out of business. That reason still rings true to me.

@GraemeH: Whatever the view on CDMA, Telecom has a history of simply buying their equipment from Alcatel-Lucent. Telecom's infrastructure appears to simply reflect A-L's product catalogue.

Even Ms Gattung noted that separation was the ultimate end game. They simply reaped what they could whilst they could - like a farmer who doesn't look after his land and stock (Crafar?).

Anyone who bought shares at the inflated price of $6+ was part of, or fooled by, the hype. A simple calculation would have shown the shares to be over priced.

The most accurate measure of Telecom's 'success' is how many consumers now choose a different service provider. Travellers don't have such choices with Airports.

Unfortunately the most likely future for Telecom is to become Telstra-com. That could lead to greater loss of income to NZ and, worse, loss of NZ jobs.

I was at Telecom Mobile during the KK Moutter era - and well the guy was bloody good - and created a culture that could for the first time compete (from way behind) with Vodafone (since let down by XT sigh) .

Though Gattung credits him with three great works - there were many other good decisions - at an operational level - and a couple of times when he over ruled KK - to great effect - he was not one to sit at a barrier.

Re: misreading the government - yeh - I don't think he is the greatest political strategist. But - when there is a competitive battle - which is where Telecom is at - he is the man for the job.

People keep saying that he is only good at Monopoly situations - sorry - but when I was at Telecom Mobile - Vodafone had 50 percent market share - and way better ARPU - so the mobile business was in a Duopoly.

Duopoly = same as monopoly when they act in concert.

But more to the point, Helen Clark started warning Telecom in Feb 2006 but Telecom and the market hardly took the warnings to heart until the government took decisive action in May 2006.

It was one big yawn for Teresa, Deane and Moutter who reassured investors that there was nothing to fear. Well, wrong!

And guess what? NZers have actually benefited since Telecom was forced to be competitive and to invest in upgraded infrastructure.

This was Telecom in 2006 :

* New Zealand ranks 22nd out of 30 OECD countries in broadband adoption.

* About 10 per cent of households have high-speed internet, half the OECD average.

* Full-speed business broadband is the second-most expensive in the OECD, with average monthly rental running about US$600 ($880), compared with leader Japan at about US$35.

re GMS and CDMA - the real answer lies in Telecoms shareholders at the time that the real decision was made - bell Ameritech. Dig deep, look out for qualcom and the CDMA linkages become quickly apparent

Yep, the Government absolutely did not force Telecom to go with CDMA!

Evidence?

was there - it was seen as a differentiator ... plus offered at the time - faster data speeds and better security for business applications.

main problem - at the time - no Nokia support (even then - Nokia struggled to get into the USA).

sigh... not supporting Nokia is not such a big issue these days.

Simon Moutter took a small local electricity company in New plymouth and grew it profitably to one of the largest distribution companies in New Zealand. He knows how to build businesses and restructure them so they are on a solid footing - he is an engineer, understands the technology and is a good businesman - cant ask for more with his track record

No.