Friday, 20 January 2017

Executive decisions: changing of the guard

By Nick Wood, Total Telecom
Tuesday 20 December 16

A certain CEO's tenure at one of the world's biggest telco vendors was abruptly curtailed this year; plus some European incumbents also made major changes at the top.

2016 will go down as the one of the more turbulent years in recent memory, not least of all for a number of executives in the global telecoms industry. Just ask Hans Vestberg, who was ousted from his role as Ericsson CEO in June as slowing spending on mobile network equipment resulted in the Swedish kit maker posting dismal financial results for two consecutive quarters. An aggressive cost-cutting programme coupled with a substantial restructuring were not enough to ease the pressure on Vestberg, who worked at Ericsson for 28 years, serving as CEO for the last seven. Following Vestberg's departure, Ericsson – led on an interim basis by CFO Jan Frykhammer – issued a third-quarter profit warning and a dour forecast for 2017. Börje Ekholm, a long-serving Ericsson board member and onetime CEO of Swedish investment company Investor AB, was picked as the vendor's new chief executive in late October…

2016 will go down as the one of the more turbulent years in recent memory, not least of all for a number of executives in the global telecoms industry.

Just ask Hans Vestberg, who was ousted from his role as Ericsson CEO in June as slowing spending on mobile network equipment resulted in the Swedish kit maker posting dismal financial results for two consecutive quarters.

An aggressive cost-cutting programme coupled with a substantial restructuring were not enough to ease the pressure on Vestberg, who worked at Ericsson for 28 years, serving as CEO for the last seven. Following Vestberg's departure, Ericsson – led on an interim basis by CFO Jan Frykhammer – issued a third-quarter profit warning and a dour forecast for 2017.

Börje Ekholm, a long-serving Ericsson board member and onetime CEO of Swedish investment company Investor AB, was picked as the vendor's new chief executive in late October. He will take over from Frykhammar in mid-January.

Ekholm "has a very good reputation," noted Bengt Nordström, CEO of Swedish consultancy Northstream, in a recent interview with Total Telecom. "Thorough, analytical decisive. There are a lot of good things said about him."

However, with Ekholm not joining until January, it is a case of wait-and-see, with Ericsson.

"Will they streamline the company and focus only on mobile infrastructure and related services, and shed off managed services and TV and media and so forth? We don't know yet," Nordström said.

Vestberg was not the only telco CEO to make an abrupt departure in 2016.

Telecom Italia's Marco Patuano found himself out of a job in March, albeit with a €6 million payout that no doubt softened the blow. He walked out the door before anyone had a chance to push him through it, after finding himself at odds with the Italian incumbent's biggest single shareholder – French media conglomerate Vivendi – which had allegedly become dissatisfied with the company's strategic direction.

Former rail company executive and Telecom Italia board member Flavio Cattaneo took the reins at the end of that same month. At the end of April, Vivendi CEO Arnaud de Puyfontaine became Telecom Italia's deputy chairman.

Vivendi has insisted that it has little interest in managing Telecom Italia; however, it is widely believed that Vivendi is hoping to reshape the operator into a Southern European-focused media company.

In December, Telecom Italia announced that its IPTV and video-streaming unit, TIMvision, will be spun off, and will start producing original content.

The writing may have been on the wall for Patuano, but for another high-ranking telco exec, it was the writing that may or may not have been on their CV that cost them.

Australian incumbent Telstra in May unceremoniously dumped chief technology officer Vish Nandlall amid reports he had falsified information on his resume.

Nandlall had replaced Telstra's long-standing CTO – and thoroughly nice chap, it has to be said – Hugh Bradlow who now serves as the telco's chief scientist.

Rather than find a like-for-like replacement for Nandlall, Telstra created a new role called Group Executive, Technology, and filled it with none other than Stephen Elop, who was no doubt keen to go somewhere warm and as far away from Finland as possible, given what happened when he was CEO of Nokia.

China Telecom got a new CEO in April, also under controversial circumstances.

COO Yang Jie took on the top job after former CEO Chang Xiaobing stepped down in late 2015 in the wake of a corruption investigation by Chinese authorities.

Meanwhile, in India, Reliance Communications CEO Vinod Sawhny departed with little warning in October. He was replaced by new co-CEOs in the form of Bill Barney – who oversees Reliance's enterprise and carrier operations – and wireless chief Gurdeep Singh.

Not every executive change in 2016 happened in such dramatic fashion though.

Telefonica's long-serving executive director, César Alierta, called time on his 16-year tenure in March. He didn't leave the company altogether though, instead he became executive chairman of the Spanish incumbent's CSR arm, Fundación Telefonica.

Into Alierta's shoes stepped José María Álvarez-Pallete, who had been earmarked for the top job ever since his appointment as Telefonica's chief operating officer.

His tenure got off to an interesting start, to say the least.

The European Commission in May blocked the proposed sale of Telefonica's U.K. arm O2 to 3UK, on competition grounds. The £10.25 billion deal would have greatly helped the company pay down some of its hefty net debt.

Telefonica was also banking on the initial public offering of its newly-created infrastructure arm Telxius to help ease its debt burden. However, that plan was scrapped after the telco received 'inadequate' valuations of the business.

Unable to sell O2, Telefonica is planning to float it instead. However, even that plan was put on the back burner due to market volatility caused by the U.K.'s controversial EU referendum.

To top it all off, ratings firm Fitch in September downgraded Telefonica's credit rating due to its exposure to countries with a non-investment-grade credit rating, restructuring charges, forex depreciation, and a weaker-than-expected results from its Latin America business.

There were also high-profile changes at some of Telefonica's operating units.

O2UK chief Ronan Dunne resigned in mid-July having held the top job since January 2008. He was replaced by CFO Mark Evans at the beginning of August. Meanwhile Dunne joined Verizon as president of its mobile business.

Telefonica Germany CEO Thorsten Dirks, who joined the company when it merged with KPN's E-Plus in October 2014, brought forward his departure date to the end of March 2017 instead of the end of September. He will be replaced by insider Markus Haas, who currently serves as COO.

Michel Combes, who has featured fairly regularly in recent yearly round-ups, changed jobs again in 2016.

Having arrived at Altice as COO in September 2015, the former Alcatel-Lucent CEO was named chief executive of the Luxembourg-based cable group this June. It was all part of a management reshuffle that saw his predecessor Dexter Goei given responsibility for Altice's U.S. business.

In addition, there was a big change at one of the Middle East's big players this year, as Saleh Al Abdooli was named group CEO of U.A.E.-based Etisalat in March. He replaced Ahmad Julfar, who stepped down earlier in the month, citing personal reasons.

Finally, EE's CEO, Olaf Swantee, who led the company since its rebranding from Everything Everywhere, stepped down after U.K. incumbent BT completed its acquisition of the company. He was replaced by EE's chief commercial officer Marc Allera. Swantee meanwhile popped up again later in the year as CEO of Switzerland's Sunrise.

From Sunrise to sunset: time to bid farewell to another eventful year in telecoms, and gird our collective loins for whatever 2017 may send our way. See you on the other side!

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