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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.
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.
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.
Maximo Ibarra resigned at CEO of Dutch telco KP the day after a major network failure, but the company insists the two events are unrelated.
Ibarra had led KPN for just a year and a half, having moved over from Italy where he was a Wind lifer and CEO for five years. If we take the KPN announcement at face value Ibarra and his family never took to Rotterdam and have decided to move back to Italy. Luckily for them Sky Italia had a vacancy and has appointed Ibarra as its new CEO once he’s served out his notice.
“I have been with KPN since 2017, and appointed CEO in 2018,” said Ibarra. “I regret the timing, but family reasons gave me no choice. I will dedicate myself the coming months to secure a seamless transfer to my successor.”
The timing referred to must surely be the major outage suffered by KPN on Monday of this week, which even shut down the 112 emergency number. It seemed to just affect voice calls, which were down across the country for three hours.
“We regret that this could have happened, and we offer our sincere apologies to our customers and also to the Dutch society,” said Joost Farwerck, COO of KPN. “We immediately established a crisis team and yesterday afternoon and evening every possible effort was made to find a solution. Thankfully, as a result, by early evening service was resumed and 112 was also accessible again.
“It goes without saying, KPN will evaluate this disruption thoroughly, because this should never have happened. In this evaluation, we will work together with the Ministry of Security and Justice, the Ministry of Economic Affairs, and the Telecom Agency and other relevant bodies. Of course, we want to learn from this disruption, so that we can draw the correct conclusions and ensure that this kind of incident can be prevented in the future.”
In the Ibarra press release KPN felt compelled to include the following statement: “His resignation is unrelated to the network outage experienced yesterday.” It probably was just unfortunate timing and we certainly have no evidence to suggest otherwise. But you can see how some people might put two and two together to make five.
A consortium on European operators has got together with AT&T to activate LTE-M roaming across North America and Europe.
LTE-M is a low power wireless technology that’s not as low-power as NB-IoT and Lora, but is better than nothing and based on existing tech. Thus it’s a handy first step into IoT for applications that don’t have minimal power consumption as a priority, but it’s still not much good unless the LTE-M modules are free to roam globally.
This is a good step in the right direction as now, if you get some kind of IoT package from one of the operators involved, you can now roam to the US, Mexico, France, Holland and Switzerland to your heart’s content. What you will do if your IoT module happens to find itself anywhere else, however, remains a mystery.
“More and more of our enterprise customers require global capabilities as they deploy IoT devices and applications,” said John Wojewoda, AVP, Global Connections Management, AT&T. “These LTE-M roaming agreements help meet that demand and make it easier for businesses around the world to benefit from the power of a globalized IoT.”
“The introduction of LTE-M creates many new possibilities for our partners, customers and prospects,” said Carolien Nijhuis, Director IoT at KPN. “Roaming with LTE-M has been one of the most requested features by our customers in the market. We are very happy we’re now able to fulfill their needs and unlock their international IoT-potential.”
“Enabling access to roaming on LTE-M for our customers is a clear priority for Orange,”” said Didier Lelièvre, Director mobile wholesale & interconnection, Orange. “We’re proud to be among the first operators to deliver such a roaming capability to our IoT customers and more widely to our partners across this market.”
“After offering the first nationwide LTE-M and NB-IoT networks in Switzerland, we are happy to prove our strong position on roaming and be among the first operators that enhance the key technology LTE-M for 2G replacement with international roaming,” said Julian Dömer, Head of IoT at Swisscom.
Dutch operator KPN announced it has signed an agreement with Huawei to build the 5G radio network but will only select a western vendor for 5G core.
KPN said it will modernise its mobile network towards 5G, and has adopted a tightened security policy with regard to vendor selection. The company believes that “the mobile core network which from a security point of view is more sensitive”, while the RAN is less so.
As a result, the operator has entered into a preliminary agreement with Huawei to provide the radio access part of the 5G network, but the agreement is adjustable and reversable “to align it with future Dutch government policy.” Meanwhile, the company “plans to select a Western vendor for the construction of the new mobile core network for 5G.”
Jan Kees de Jager, KPN’s CFO, told the media separately that the upgrade will also involve swapping out Huawei equipment from its current core network, according to a report by Reuters. In contrast to what his counterparts in Germany and the UK have claimed, de Jager did not believe switching from Huawei for other vendors would lead to addition cost. Equipment from Nokia, Ericsson and other suppliers would be as affordable as Huawei for the 5G infrastructure, he was reported to tell the media.
“We appreciate KPN’s trust and are honoured by their decision to partner with us for the mobile radio access network modernisation,” said a Huawei spokesperson. “We are committed to support KPN in their ambition to maintain and strengthen their lead in the global telecoms industry.In general, Huawei believes that excluding parties based on geographical origin does not provide a higher level of security. Cyber security can be improved by establishing standards that apply to all parties in the sector. Today, the IT supply chain is highly globalised. Cyber security must therefore be addressed jointly at a global level and suppliers must not be treated differently based on the country of origin.”
KPN is essentially adopting the same policy as the leaked UK government guideline related Huawei’s role in the country’s 5G network: banned from the core but fine to use in the RAN. But precisely because it is adopting the same policy, KPN has to face the same issue raised by Tom Tugenthat MP, chairman of the British parliamentary Foreign Affairs Committee, that it will be very hard to insulate the non-core from the core on 5G network thanks to its virtualisation and software-defined nature.
Additionally, although equipment from different vendors should work together as they all comply with the 3GPP standards, standards do not cover every detail. As Huawei stand staff told Telecoms.com during MWC, there are plenty of discreet innovations vendors can make to optimise the performance of the system if both RAN and core come from the same vendor. So, operators might risk having subprime performance out of the network equipment sourced from different vendors, if not facing downright incompatibility headache.
KPN has announced the launch of four new 5G trials in the Netherlands, while also giving the government a bit of a nudge to grant access to the 3.5 GHz frequency band.
Although the 3.5 GHz frequency has been marked as a priority for 5G by the European Commission, Dutch regulators have not included the band in any spectrum auctions to date, or the auction scheduled for 2019. This has been a point of frustration for the telcos, who seem to be taking it in turn to urge regulators to rethink plans. While this is seemingly KPN’s turn, VodafoneZiggo made a similar plea towards the end of 2017 which fell on deaf ears.
“Where 4G connects people, 5G will connect the whole society. It is therefore very important that we, together with customers and technology partners, investigate how 5G can optimize business processes and improve the customer experience,” said Jacob Groote, Director of Product Management Business Market at KPN.
Right now the band being used for defence and intelligence at a satellite monitoring station in the north of the Netherlands, and closed broadband networks elsewhere. Regulators have said the issue will be cleared up in time for the 2019 auction, but there has seemingly been little progress to date, much to the frustration of the telcos.
Despite the confusion, KPN has also confirmed it will begin four new 5G trials focusing on Massive MIMO in urban areas with Nokia (Amsterdam), connection of drones for precision agriculture (a farm in Drenthe), virtual reality in industry (Rotterdam Harbour) and self-driving vehicles (motorways near Helmond).
In terms of the applications in agriculture, the team will work with Wageningen University and ZTE, to test out various precision agriculture practises based on drones. The trio will also be using millimetre wave with the aim of generating speeds greater than 1 Gbps. Over in Rotterdam Harbour, network slicing is the focus of the trial. Working with Huawei, the aim is to effectively demonstrate network slicing techniques for business critical applications using virtual reality.
KPN has thrown a considerable spanner into the Liberty Global machine as the European Court of Justice overturns a decision to approve the merger between UPC and Ziggo back in 2014.
Liberty Global made the move to merge its UPC brand with Ziggo back in 2014, which was approved by the European Commission. KPN’s temper tantrum appeal is based on the argument the European Commission did not consider the anti-competitive impact of such a merger on the Pay-TV sports market in the Netherlands.
Agreeing with KPN, the European Court of Justice is also rubbing salt into the wounds of the European Commission by forcing the bureaucrats to pay the telcos legal fees. But that will not be the end of the ripples.
What is unknown for the moment is the impact this decision will have on the joint-venture between Liberty Global and Vodafone. The pair have merged certain parts of the business to form Vodafone Ziggo, though this new organization is currently in the process of integrating its mobile and cable operations. This is a complicated enough job as it is, such a distraction will probably not be appreciated by the team.
In terms of the next steps, Liberty Global will once again have to go through the clearance process, this time making considerations for the competition concerns. The decision will not have an impact on the deal between Vodafone and Liberty Global, this was a completely separate process, but it is an interference nonetheless.
KPN will be having a little giggle to itself though. Chaos achieved.
Dutch telco KPN has cosied up to China Unicom to improve its access to the Chinese IoT market and will return the favour in Europe.
The two companies will offer reciprocal access to each other’s IoT networks, making use of remotely provisionable SIMs in IoT devices that allow switching to the cheaper network depending on where the device happens to find itself. Europe, of course, has gotten rid of roaming premiums so KPN’s domestic tariffs apply across the continent.
“This agreement will enable our customers to become global IoT players, since we are able to handle international requests quickly and easily,” said Carolien Nijhuis, Managing Director of KPN IoT. “We are constantly looking for strong partnerships and have found a trusted partner in China Unicom.”
“It’s really an exciting moment that China Unicom will be able to provide a global IoT solution partnering with KPN,” said Li Chong (Chairman, China Unicom Global Ltd) and Chen Xiaotian (General Manager, China Unicom IoT Business Unit), apparently in unison. “With this solution we are offering ‘one SIM, one portal, one experience’ to our customers. The partnership between China Unicom and KPN will enable Chinese and European enterprise customers to bridge the digital gap between global IoT deployments.”
The two operators will also offer a unified connectivity management portal, but how companies will track and manage their IoT devices when they’re not in either Europe or China remains a mystery. The trick is presumably to fly over Russia, India and the Middle East as quickly as possible and cross your fingers.