Three UK in a spot of bother as senior execs head for the exit

With Three’s big bet on Huawei proving to be somewhat of a disaster, two senior technologists are heading towards the exit.

Many have focused on the difficulties faced by BT in light of Huawei’s limited role in the 5G future of the UK, but Three is potentially facing the biggest headache of all. And just as the team begins to pick up the scraps of a decimated deployment strategy, two of its most senior technologists have exited the business.

Phil Sheppard, who was for all intents and purposes the telco’s CTO, and Graham Marsh, the former-Director of Core Technology, have almost 30 years of Three experience between them. Now neither is working at the telco, and despite these two most likely having a significant input into the headache that is the current rollout plan, this is a company which probably needs as much experience in the ranks as possible.

While there will be conspiracy theorists who link these exits with the Huawei decision, this might be somewhat of a dubious link. Graham Marsh has already started his new role, founder at Infinite Potential, while Sheppard’s exit is less than a week after the Supply Chain Review announcement. There might well be a link, but this would be an incredibly cut-throat decision. Sheppard has said on LinkedIn he will be doing consultancy work in the immediate future, as well as taking a few holidays.

Irrelevant as to the background, Three could really use with this experience in the room not working for someone else.

The sticky situation which Three is currently in should not be taken too lightly. Three went big and bold with its 5G deployment plan, deciding to swap out Samsung 4G RAN to ensure backwards compatibility with its sole 5G RAN supplier Huawei. This strategy could have been a game-changer for the city-centric telco, but now it looks like a complete disaster.

The conclusion of the Supply Chain Review last week have certainly been met with mixed reviews. For some, at least there is a decision, a foundation of certainty which can be built on over the coming years as the industry hurtles towards the 5G era. But for others, the 35% network share restrictions on ‘high-risk vendors’ is either too extreme or not extreme enough. There isn’t a huge amount of consensus when it comes to the position on Huawei.

There are now two restrictions which the telcos will have to bear in mind. Firstly, equipment from ‘high-risk vendors’ cannot make up more than 35% of the radio inventory across the network. Secondly, no more than 35% of the total internet traffic across the year can pass through equipment from ‘high-risk vendors’. For a telcos who’s sole 5G RAN supplier is now deemed a ‘high-risk vendor’, this is a monumental migraine.

During its earning call last week, BT outlined the financial impact of the Supply Chain Review decision; £500 million. Part of this will be redefining its deployment strategy, while it will perhaps have to undertake a ‘rip and replace’ project to ensure there is interoperability between 4G and 5G RAN equipment. Three is yet to put a figure on the Huawei conundrum, but the impact here will be much more than financial.

Firstly, you have to consider the ‘rip and replace’ project it has been undertaking for the last six months in an effort to replace Samsung with Huawei as a sole supplier. Some of this work can be left alone, it has a 35% window to work with after all, but depending on progress, some of this work might have to be undone to ensure new supplier equipment performs to the levels desired.

Secondly, there is a major timing penalty placed on Three.

Picking a supplier in the telco industry does not happen overnight. There are numerous bureaucratic hurdles to jump over, commercial negotiations to take place, and trials which need to be navigated. It isn’t as simple as replacing Huawei with Ericsson, let’s say, this is incredibly time intensive.

Three is in a difficult position, and more often than not, whenever this is the case the people who have ‘been there, done that’ are some of the most valuable in the room. Unfortunately for Three, two of its most senior technologists are seeking pastures new.

Some have suggested the exit’s might be linked to the Huawei decision. There might be an element to this, but we suspect it is more a case of coincidence and bad timing. Very bad timing as it works out.

NB: On a personal note, best of luck to Phil. Having interviewed him a few times on camera and events, Phil is a lovely man with a wealth of experience. Whoever hires him next has found themselves an excellent employee!

Nokia reckons it doesn’t need a COO anymore

Joerg Erlemeier, a Nokia lifer who is currently its Chief Operating Officer, is calling it a day at the end of the year and Nokia won’t be replacing him.

To be honest we didn’t know Nokia even had a COO, but then again it’s not traditionally one of the more high profile top jobs. Your classic COO usually contents themselves with staying behind the scenes, attending to the day to day running of the company while the CEO flies around doing deals and other important stuff.

Here’s what Erlemeier has been up to in his quarter of a century at the company, according to the Nokia site:

  •  Senior Vice President, Integration, Nokia, 2015
    •    Vice President, Global Services, Europe, Nokia, 2015
    •    Head of Delivery, North America market, Nokia, 2013/14
    •    Head of Program Management Office, Nokia Siemens Networks, 2012
    •    Head of Middle East & Africa, Nokia Siemens Networks, 2009 – 2011
    •    Held several executive level positions in Nokia/Nokia Siemens Networks, 1994 – 2009

Erlemeier’s linked in has him doing a variety of restructuring, integration and transformation roles in recent years, which may imply he has a big part in the whole Alcatel-Lucent process. Either way, he’s off to spend more time in the golf course and Nokia doesn’t think it needs a COO anymore. Instead it’s going to get the rest of the C-suite to work harder.

“Joerg has been a long-time, trusted colleague,” said Nokia CEO Rajeev Suri. “He leaves the company with my thanks and deep appreciation for his many important contributions.”

“After 25 years at Nokia, I am ready to take on new challenges,” said Erlemeier. “While the company is in the midst of a transition, I leave firm in my belief that the right plan is in place to improve future performance. I wish the company and all my colleagues the very best.”

Hardly the most touching eulogy from Suri, was it? Perhaps it has something to do with the fact that Nokia seems to have binned the COO role first, not as a result of Erlemeier’s resignation. In other words he got the boot. To what extent this move is linked to Nokia’s 5G missteps is unknown, but companies don’t tend to get rid of senior execs when everything’s going well, do they?

Ofcom reported to have picked another civil servant as new boss

There was a time when some degree of telecoms expertise was considered a desirable quality in a prospective head of Ofcom, but that is long gone.

According to a report from the Guardian, former civil service Permanent Secretary Sharon White will be replaced as Chief Exec by former civil service Permanent Secretary Melanie Dawes if Ofcom has its way. While the appointment is made by the Ofcom board, it needs to be approved by the Secretary of State for Digital, Culture, Media and Sport. Since we’re not sure who that will be by the end of the year, Ofcom would apparently prefer to keep its choice quiet until after the General Election.

We asked Ofcom for comment, but were given the standard line about not responding to rumour and speculation, which was expected. We were pointed towards today’s official announcement that Ofcom board member and Chief Exec of the UK Regulators Network will be keeping the seat warm for Dawes, or whoever, until the UK political dust settles a bit. Oxley has ruled himself out of taking the gig permanently.

The Guardian quoted some random anonymous person who they say knows Dawes as calling her ‘a safe pair of hands’ and we have no reason to doubt this mysterious insider. That’s presumably why senior civil servants are now preferred to people with industry expertise – the government doesn’t want Ofcom getting funny ideas about policy and that sort of thing. Just keep quiet and do what you’re told, there’s a good regulator.

KPN goes in-house to resolve CEO soap opera

Having bailed on its new CEO within days of announcing her, Dutch operator KPN has taken the safe option with its next pick.

Current COO Joost Farwerck (pictured) has been promoted to CEO with immediate effect, following the decision not to follow through with the appointment of Dominique Leroy, who is being investigated for insider trading. Farwerck is effectively caretaker CEO for now, but KPN has announced its intention to formalize the gig on 1 December, presuming there are no further dramas.

Picking an internal lifer who has been on the management board since 2013 largely eliminates the possibility of nasty surprises or skeletons in the closet, which must surely be a high priority after the Leroy debacle. Having passed over Farwerck in favour of an external appointment so recently, the conversation must have been a bit awkward, but fair play to him for not sulking.

“With Joost assuming the role of CEO, the supervisory board is pleased to appoint an experienced telecommunications professional,” said the presumably relieved KPN Chairman, Duco Sickinghe. “He has been a member of the board since April 2013 and is part of the leadership team that shaped the 2019-2021 strategy. Joost knows the company inside out and the environment the company is operating in. With Joost as CEO, the supervisory board is convinced that we will make good progress on the further development and execution of KPN’s strategy.”

“It is with pleasure that I assume the role of CEO of this great company which focuses on offering high speed connections to consumers, businesses and Dutch society,” said Farwerck. “KPN is a company with a realistic strategy in place to perform in the competitive Dutch market. My primary focus will be to deliver on that strategy and explore how we can accelerate the execution even more to deliver organic sustainable growth. We have a great team and a lot of dedicated people in the company. I am eager to work with all of them to execute on that strategy.”

Farwerck will be paid €875kpa, which isn’t bad, but is still less than the €935k Leroy was due to get. Given the very strong negotiating position he must have been in following the Leroy business, this doesn’t say much for his negotiating skills. Maybe he’ll get a bit more in December.

KPN cancels CEO appointment following insider trading investigation

Dominique Leroy was due to switch from Proximus to KPN but now she’s CEO of neither following an investigation into insider trading.

Leroy (pictured) was unveiled as the new CEO of Dutch telco KPN earlier this month, having previously headed up Belgian operator Proximus. She was due to hang around at Proximus until December, but within days employees of the company protested the prospect of having a ‘lame duck’ CEO at a time when there was extensive restructuring underway. This led the Proximus board to bring forward Leroy’s departure date to 20 September.

Another reason for the staff kicking off may have been the revelation that Leroy had flogged a bunch of her Proximus shares on 1 August, just a month before calling it a day. No unreasonably this led to speculation that she may have conducted the sale in advance of an anticipated drop in the share price following the announcement of her resignation. Leroy addressed the matter in a personal message published on the Proximus site. Here is it in full.

I would like to comment my sale of Proximus shares on August 1, 2019.

A CEO of a stock quoted company has few moments in which he can trade his company shares on the stock market. As for me I was in a closed period- this is a period during which no transactions are allowed- since November 22, 2018. I had the intention to trade my shares since several months, but this was not possible. After the publication of the results of the second quarter, August 1st was the first day on which new transactions were possible. I have therefore instructed the bank end of July to sell shares that day, what happened with notification to the financial regulator on August 5, as it needs to be done and with publication on their site on August 6.

At that moment I had not decided to leave Proximus. I was in discussion about the renewal of my contract with Proximus and had some conversations with several external parties, amongst which KPN.

I understand that with hindsight the timing can create the perception that I did this exactly prior and because of my departure. This is surely not the reason for my sale of shares, but this can –now that the discussions with KPN are closed soon after my holidays and the communication on my departure already had to happen beginning of September- be understood in such way by the external world. I regret that this perception has been created, this is not in line with my values where integrity and transparency are very high.

Belgian authorities don’t seem to have been reassured by this explanation, however, and launched a formal insider trading investigation, even going so far as to search her home for incriminating evidence. Typically this isn’t the kind of stuff companies like hanging around their new CEOs and KPN seems to have decided Leroy is not worth the extra aggro.

“KPN regrets to announce that Mrs. Dominique Leroy is no longer a candidate in the process to become the Chief Executive Officer and Chairman of the Board of Management of KPN,” said today’s announcement. “The duration of the procedures which concern Mrs. Leroy by the authorities in Belgium is unclear and unpredictable. The Supervisory Board of KPN considers these uncertainties around timing not in the interest of KPN and its stakeholders. For this reason, the Supervisory Board has taken the decision to withdraw the intended appointment of Mrs. Leroy in the position of CEO of KPN.”

“This was a difficult decision for the Supervisory Board given the track record of Mrs. Dominique Leroy as a very accomplished executive,” said current KPN Chairman Duco Sickinghe. “However, the uncertainty around timing results in a situation, which the Supervisory Board considers not in the interest of KPN. We wish her all the best.”

In other words: you’re on your own, kid. While it’s understandable to rethink a decision in the light of new information, it’s notable that KPN isn’t willing to wait to see if Leroy is exonerated by rhe investigation. Either they think there’s little chance of that happening, they think she’s irredeemably tarnished regardless or they just think the process will take too long.

Leroy presumably did her due diligence before selling the shares, but it’s hard to see how she can justify selling the shares before the announcement of her departure was made, since she already concedes she was considering doing so when she sold them. Meanwhile both Proximus and KPN are CEO-less.

With Vivendi subdued, TIM Chairman Conti calls it a day

Fulvio Conti, who was appointed as Chairman of Italian telecoms group TIM after Vivendi lost control of its board, thinks his work there is done.

“The Board received the resignation of Fulvio Conti who stepped down as Chairman of the board and Director of the company as of the end of the meeting,” said a TIM statement. “Mr Conti stated that he believes his mandate has been completed, in light of the Board achieved stability in its operations and the renewed focus on creation of sustainable value for all the company’s stakeholders.”

Conti got the gig back in May 2018 after activist investor Elliott succeed in wresting control of the TIM board from French conglomerate Vivendi. His appointment, along several other Elliott nominees, was resisted by Vivendi on the reasonable assumption they were inclined to accommodate Elliott’s wishes in board meetings. Even if that was the case, however, it was hard to see how it was any different to the situation when Vivendi nominees dominated the board.

There followed months of moaning from Vivendi as it attempted to persuade TIM shareholders to get rid of the of the offending board members, but to no avail. In April of this year Vivendi officially threw in the towel, and has maintained a sulky silence ever since. Conti seems to have interpreted this as Vivendi permanently getting back into its box and, as a result, likely to be a corporate good boy from now on.

Conti’s departure could be viewed as confirmation that his main function was the taming of Vivendi, and now that job has been done he’s free to spend more time with his yacht. The TIM board couldn’t resist one last dig, however, noting “the positive contribution, the complete correctness, the institutional sensible approach and respect for the rules during his mandate in the interest of the company, its shareholders and all stakeholders.”

HTC taps Orange for new CEO

Struggling Taiwanese device maker HTC has finally found a full-time CEO by tapping into the European telecoms scene.

Former Orange exec Yves Maitre (pictured, no relation) takes over as CEO with immediate effect. He replaces owner and Chairwoman Cher Wang, who stepped in as CEO more than four years ago after deciding to throw in the towel on smartphones.  Wang has spent that time pivoting HTC towards virtual reality and the Vive headset, as well as some other connected devices.

Maitre was most recently EVP of Consumer Equipment and Partnerships at Orange was well as being a member of Orange’s innovation technology group, with a focus developing disruptive revenue opportunities, so his appointment is consistent with HTC’s new direction. Wang and the HTC board have clearly committed the company’s future to emerging mobile devices.

“When I took over as CEO four years ago, I set out to reinvent HTC as a complete ecosystem company and lay the foundations for the company to flourish across 5G and XR,” said Wang. “So, now is the perfect time to hand over the stewardship of HTC to a strong leader to guide us on the next stage of our journey.

“I am truly delighted that Yves is taking the reins; he has a long association with our company, and he shares our passion for innovation. I firmly believe Yves is the right leader to continue to lead HTC to its full potential.”

“HTC has long been a bellwether for new technology innovation and I’m honoured to be selected by the Board of Directors to lead the next phase of HTC,” said Maitre. “Across the world, HTC is recognized for its firsts across the mobile and XR space. I am incredibly energized to grow the future of both 5G and XR alongside HTC employees, customers and investors.  We will set out immediately to continue the transition from building the worlds’ best consumer hardware to also building complete services around them to make them easy to manage and deploy.”

XR refers to mixed reality, which covers all forms immersive digital experience, including augmented reality. The advent of 5G is a potential boon for this kind of tech, especially when the low-latency stuff starts to kick in, as it will enable wireless VR without the kind of lag that makes people throw up. Recruiting someone from the operator side appears to be an acknowledgement of that.

HTC was arguably the most successful Android smartphone maker initially, establishing close ties to Google and shipping in impressive volumes a decade ago. But then much bigger players like Samsung and Huawei got their acts together and HTC simply couldn’t compete with their deep pockets and economies of scale. It will attempt to replicate that feat with XR and hopefully will have a better strategy for fending off the big guys next time.

KPN poaches Proximus CEO

Dominique Leroy has played Benelux musical chairs by moving from Belgian Proximus to become Dutch KPN’s new CEO.

The CEO vacancy at KPN was created by the sudden departure of Maximo Ibarra earlier this year for family reasons, which coincided with a major outage for which KPN was culpable. Leroy has been CEO of Proximus for five years but her new salary of around a million euros a year was presumably a factor in convincing her to seek new challenges.

“We are very pleased to appoint Dominique Leroy as the new CEO of KPN,” said Duco Sickinghe, KPN Chairman. “Dominique is a dynamic, customer-focused and engaging leader with a wealth of experience in the telecommunications industry. With her strong strategic, operational and communication skills, we are convinced that Dominique will be able to successfully execute on KPN’s strategy.”

“At the end of last year KPN unveiled its 2019 – 2021 strategy, prioritising sustainable growth in the medium term. Good progress has been made to date, driven by our dedicated Board of Management and Executive management team, and executed by our colleagues throughout the firm. With Dominique at the helm, the Supervisory Board is confident that we will see further progress in the delivery of KPN’s strategy, positioning KPN for further success in the years to come. Continuing to execute against that strategy will remain KPN’s focus.”

“I am very excited to be nominated as the next CEO of KPN,” said Leroy (pictured). “KPN has a high-quality reputation and an excellent leadership team. I am looking forward to working with them and the wider KPN team to execute on the existing strategy and help KPN to become a premier digital services and communication provider with the customer at its heart.”

Ibarra’s resignation was due to complete on 30 September but Leroy isn’t available until 1 December. It looks like COO Joost Farwerck is going to be super-sub CEO for October and November, but since the board doesn’t seem to have been able to come up with any strategy beyond the basic default for any company, that shouldn’t be too tricky.

AT&T tries to breathe McElfresh air into its communications division

US operator giant AT&T has unveiled lifer Jeff McElfresh CEO of AT&T Communications, replacing the retiring John Donovan.

McElfresh has been at AT&T for 25 years and was most recently President of AT&T Communications’ Technology and Operations group, which covers the techie side of things. Since we’re at the start of the switch to a new generation of mobile technology it would seem to make sense to promote someone from that side of the business. They could, of course, have recruited externally, but that doesn’t seem to be AT&T’s style.

AT&T CEO Randall Stephenson doesn’t seem to fancy dealing with McElfresh on a regular basis, however, as he has created a new COO position that will be filled by John Stankey, who is currently in charge of all the stuff AT&T got with its massive Time Warner acquisition. He will now manage McElfresh as well at Warner Media and will also be the direct report for Brian Lesser, CEO of the AT&T’s digital advertising platform Xandr.

“Now is the time to more tightly align our collection of world-class content, scaled consumer relationships, technical know-how and innovative advertising technology,” said Stephenson.  “It’s the natural next step in bringing together the distinct and complimentary capabilities of AT&T Communications, WarnerMedia and Xandr to deliver for consumers the benefits of a modern media company.

“AT&T is alone in the industry in being able to bring together these three great businesses for the launch of innovative consumer offers, relevant advertising and new entertainment services like HBO Max.

“John is an outstanding executive who has led nearly every area of our business, helped shape our strategy and excelled at operations throughout his career. The Board and I look forward to John hitting the ground running in his new role as president and COO.

“And I’m excited to have Jeff leading our communications business into the future. He is an accomplished leader with experience across our business — from strategy, technology and network, to marketing, operations and customer experience. This past year, Jeff led the team that won AT&T recognition for having the best, fastest and most reliable wireless network in the country.”

You have to wonder what that leaves for Stephenson to do, other than approve canned quotes for press releases. Still, he’s been a t the helm for 12 years so he’s earned the right to spend more time with his golf clubs.