New broom sweeps clean at Gen-i

Computerworld talks to Tim Miles, who was recently appointed Gen-i CEO

He had to expect the question: What do you think of Vodafone releasing 4G plans in the market before Telecom?

“If you want to know, ‘Am I comfortable where we are?’ Yes I am,” says Tim Miles, new CEO of Gen-i, whose curriculum vitae includes a stint as chief executive at the opposition Vodafone.

Later, he tells me that people seem fascinated by the competition between the two telcos, but there are other, more interesting things to talk about. Which may be true, but he’s clearly a competitive person. When asked how to create a culture in Gen-i in an environment where job cuts are pending (Telecom CEO Simon Moutter told analysts last month the company will be laying off hundreds of staff), Miles replied:

“They [staff] have got to feel like they’re winning.”

Career highs and lows

Miles has experienced career ups and downs. His stint at Vodafone NZ between 2001 and 2004 must have impressed the international telco because he was rewarded with the CEO role at Vodafone UK and a seat on the global executive board. But this professional ‘high’ was cut short for family reasons.

He’s also headed companies facing tough times. In 2008 he took over as chief executive at PGG Wrightson.

“They say in life, timing is everything. So I had about three or four months where everything went swimmingly well and then we ended up with the Global Financial Crisis. To create PGG Wrightson as it was to be, the previous folk had put quite a bit of debt into it, which back then had been seen to be quite a good thing to do,” he says.

“There we were finding ourselves with declining earnings and owing a lot of money and so the job - instead of what I’d been asked to do - came to be about re-capitalising the business. We ended up paying $300 million of the debt back, got a nice, safe balance sheet. That’s basically what I ended up doing for about three years.”

He took some time out after leaving PGG Wrightson and Gen-i is his next gig. Prior to roles in the telco and agribusiness industries, he worked for enterprise IT vendors IBM and Unisys.

Cost cutting

Miles has been in the job about a month now and is still working out the direction Telecom’s ICT division will take. First up is the issue of staff cuts, or what Miles calls “having a cost model that makes sense.” There are 2500 Gen-i staff – does he have a number in mind as to where it will end up?

“No, and if I did I wouldn’t give it to you at the moment either.”

He is in the process of creating his own strategy for Gen-i, which is likely to be implemented within the next six months.

At Telecom’s half-year results announcement in February Gen-i appeared to have slipped a bit. Earnings before interest, tax, depreciation and amortisation (EBITDA) was $186 million, down 1.6 percent compared to the previous half-year result. There was some commentary from Moutter about Gen-i experiencing “continued price-based competition” and trying to get out of low margin business and back to the big end of town.

All of govt IaaS panel

Moutter has effectively signalled his commitment to Gen-i (Moutter created the ICT division for Telecom during his last stint at the telco) with the announcement before Christmas that the company would build three new datacentres in Christchurch, Wellington and Auckland in the next two years. Other than the cost of the Christchurch datacentre – $10.5 million – the capital investment has not been disclosed.

But will it be enough to get a place on the government’s infrastructure-as-a-service supplier panel alongside IBM, Revera and Datacom? Gen-i was dropped from the tender process to provide datacentre housing, utility computing and storage services to all government agencies in August 2011.

Is getting on the all of government IaaS panel one of Miles’s key performance indicators?

“The IaaS panel – I would say it’s a good thing to be on it. Is it my reason for being, no,” Miles says.

“We’ve got to be allowed to get back on it [Department of Internal Affairs would need to re-open the panel] but we see a lot of demand from our clients and potential clients around datacentres and cloud, whether that be government or non-government.”

New cable

There is demand for data and for bandwidth too. The latter is why he says Telecom is investing in a trans-Tasman cable called Tasman Global Access (TGA) with Vodafone and Telstra. Computerworld asked whether owning a stake in TGA as well as the Southern Cross Cable (the only international data cable exiting New Zealand) is about shutting out the smaller players in the market.

“I haven’t been part of the decision making but I don’t think anybody’s spending that sort of money ($70 million) for that. The money is being spent with capacity in mind because we believe the demand is there,” he says.

“The fact that there are three parties involved also tells you. If someone was going to steal the march, you’d do the whole thing yourself wouldn’t you and cut your competitor out. There is a partnership with three organisations coming together to build this because there is a lot of demand.”

Data, cloud computing and mobility are the three areas which Miles’s customer research is telling him is likely to be the focus for Gen-i. “That is where I guess we will end up and that will be no shock to anybody.”

LTE trials

So what about mobility, in the technology race with Vodafone/TelstraClear, the competitor may be the first to “go live” with 4G/LTE services, but Gen-i’s major clients have been trialling the technology for about as long as Miles has been in the building.

He says he hasn’t tested it himself, and he won’t be making the decision about which technology partner Telecom chooses for the commercial launch later this year. It could be those conducting the trial – Huawei or Alcatel-Lucent – or it might be another vendor.

In the meantime, he’s not concerned with his former company getting the jump on his current company in the race to 4G services.

“I’ve been amused by the [Vodafone’s 4G] advertisements. The advertisements say something like ‘guess who was first?’ Big letters 4G, and then in small print it has ‘available in small parts of Auckland’, which I think is absolutely beautiful,” says Miles, who has clearly switched sides and is watching his old company closely.

“I would just say this to you, if you look at the results in the mobile market in the last while – nothing to do with me, I wasn’t here – it’s clear that Telecom has been performing very well in mobile, 103,000 net adds [since CDMA shutdown]. I think if you look at the other guys’ stats in same period it’s a very different picture.”

Gen-i across the ditch

Miles says the future of Gen-i’s Australian business is up for debate.

“The core of Gen-i’s business is around trans-Tasman, but also they’ve been doing some other things just in Australia that aren’t trans-Tasman and that’s one of the things I’m looking at.”

The opportunity to re-shape the Australian business is timely given the resignation of Gen-i Australia chief executive Paul Wilson at the beginning of February. In a statement, the company says Wilson is pursuing other opportunities.

Formerly general manager of key clients in Wellington, Wilson took up the Australian position in July 2010.

He has been replaced by Paul O’Donohoe who has taken over the role in an acting capacity.

- Additional reporting by Randal Jackson

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