Exit interview: Spark boss Simon Moutter on his sports gamble, a Huawei complication and what's next

"I'm a hands-on guy and I don't feel finished yet. I'd like to do a significant core role," Smon Moutter says. Photo / Leon Menzies

Spark boss Simon Moutter speaks to the Herald on his second-to-last day in charge of the telco. A broad-ranging interview covers the World Cup game that makes him the most nervous (hint: it's not the opener or the final), the Huawei 5G mess, and speculation about politics and corporate gigs.

Spark managing director Simon Moutter leaves the company with several crucial projects mid-flight - including the telco's contentious 5G upgrade and its effort to stream the 2019 Rugby World Cup.

It seems curious that a Type A personality would head for the door when so many plates are up in the air. Why now?

"I don't think there's ever a great time to leave in a business like Spark where you've always got lots of big, complex change programmes underway," the 59-year-old says.

"I've always said that I'd do five to seven years in the role. Coming up to the end of the seventh year, it feels like the company's in great shape."

The exact day of Moutter's departure - the final day of Spark's 2019 financial year - is less of a mystery.

A Spark governance report reveals a "good leaver" deal negotiated in 2016 that saw Moutter retain eligibility to receive a long-term bonus scheduled to be paid out after his departure if he worked through to the end of FY2019, and did not join a competitor (and the board judged relevant performance targets had been hit).

An "agile" restructure is now in a "sustainable" phase, he says, and "I'm very confident around preparations around the Rugby World Cup which is the other big initiative in flight."

So what's next?

There have been hints that Moutter is something of a political animal, including his call for other companies to follow Spark's 2016 living wage initiative, and the Spark-owned Lightbox's anchor sponsorship of The Spinoff, home of agit-prop campaigning at times.

Forget that rumour.

"You can rule me out on politics. That's for sure. I've tried to say it publicly about 20 times. Let's just get that off the table. It's not my thing," the departing telco boss says.

Another big corporate gig, then?

Here, Moutter is more expansive - even if he's not willing to comment on specific open roles, including the Air New Zealand CEO position being vacated by Christopher Luxon.

"I will take a bit of time to clear my mind," he says.

Depending on what beach he chooses to clear his head on, he could be rubbing shoulders with ex-Vodafone CEO Russell Stanners, 2degrees boss Stewart Sherriff and Chorus head Mark Ratcliffe - all of whom have chucked in the towel over the past year in a complete clearout of our big four telecommunications companies.

He hints that he still has another CEO stint in him, however, rather than leaning back and taking a few directorships.

"I do feel still 'hands-on'. I don't feel ready yet to make a portfolio career in a governance sense. I'm a hands-on guy and I don't feel finished yet. I'd like to do a significant core role."

Worth his salt?

Moutter served as chief operating officer of the company formerly known as Telecom during the 2000s, serving as Theresa Gattung's enforcer. He was the technocrat. The hard man. The guy who did not think twice about chewing out a journalist.

When he returned as managing director in 2012 (after a stint as Auckland Airport CEO), it was easy to see him pushing through long-overdue technology upgrades and implementing headcount reductions to get in line with rivals.

Back then this reporter posed the question: "Will he have the flair and imagination to change the company in the right direction?" as it adjusted to live as a retailer, without the security of its network monopoly (carved off to Chorus).

It turned out the Moutter-era was hyperactive on that front, from the name change to Spark to a big push into cloud computing to Skinny to the Qrious data analytics push to the launch of Lightbox and now, of course, a head-on challenge to Sky TV with Spark Sport. Its mobile operation, still reeling from the XT blunder and badly trailing Vodafone when Moutter took over, is now toe-to-toe with its key rival.

At times it's looked a little like throwing lots of stuff at the wall to see what will stick, and some investments have been outright hard to fathom (why is Spark backing hire-a-tradie and real estate sites?). But it's never been dull and, overall, it's been successful.

Despite a recent dip (and what CEO would not want at least a tiny fall on news of their departure?), Spark's stock has risen strongly during Moutter's reign.

The shares hit a 10-year high of $4.25 last year.

Despite headaches (including the recent evaporation of dividends from the once cash cow Southern Cross Cable), earnings have held up better than most telcos around the world, and Forsyth Barr (which rates Spark "neutral") is picking that net profit will rise from $365m last year to $398m for 2019 - and rise again to $420m next year and $433m in 2021.

Pundits say the Moutter era was a success.

"He took an ex-state monopoly and did something quite unusual - turned it into a competitive retail player in the market. He deserves full credit for that," commentator Paul Brislen says.

Telecommunications Users Association head Craig Young says, "Simon took the hard choices and transformed Spark from a traditional telco when it split with Chorus and positioned it for the future."

But the ultimate verdict on Moutter's reign won't come until the World Cup in September. Will the streaming work? And if it does, at what financial cost, and how many will pay for it?

The answers to those questions will influence Moutter's successor, Jolie Hodson, as she decides whether to continue and expand his radical push into sports broadcasting and with it, his legacy.

Curtains for Huawei

Moutter says he "leaves impatient" over his company's 5G mobile network upgrade, which Spark wants to go live by July 1 next year.

Partly, he wants the government to get a wriggle-on with the spectrum auction.

But the Spark MD passionately supports Huawei. Yet it's now seven months since his company had its proposal to work with Huawei knocked-back by the GCSB - and although the government has said Spark can resubmit a revised proposal (and Huawei is champing at the bit for it to do so) Moutter indicates that time is running out and the chances of any resubmission are receding to zero.

"We will make a call on the first vendor very soon. We wouldn't leave it until after the spectrum auction," he says.

Auction details are expected to be confirmed by Comms Minister Kris Faafoi by year's end.

Moutter implies that time-pressure will exclude Huawei, whose problems are only multiplying.

"The Huawei issue started out as an issue around the GCSB and their potential conduct in - in layman's terms - spying activity. Our view on that is there's never been any hard evidence and we maintain that position," he says.

Huawei's headquarters in the Auckland CBD. Photo / Chris Keall.

"But recently the issues around Huawei have got more complex with them being included on the banned trade partners list out of the US - and that's having a much bigger impact on countries' ability to use Huawei in a wider sense, not just related to 5G."

Google's Android software (which runs Huawei's smartphones) has been in focus, but the White House ban also means US chipmakers and 5G network component makers like Intel, Broadcom, Qualcomm and Micron Technologies are barred from supplying the Chinese telco giant.

"Our view at Spark is that we'd love to have Huawei in the mix. They've been an outstanding technology partner. We want to see them back in the mix. But we do accept that there's now quite a lot of complicated issues to be worked through - and we have little say in any of those.

"It would seem pointless to advance the discussion around whether they're involved in any spying activity when they're not going to be able to serve a lot of the technology if they are on these banned technology lists.

"Our intention will be to have more than one vendor in our 5G portfolio so we can progress without Huawei, with another vendor."

Unfinished business: the World Cup

Moutter remains bullish about the Rugby World Cup.

He says glitches so far have all been "manual" or human error, and that there have been fewer than he expected as the streaming service stretches its legs with Formula 1, hockey and other minority sport content.

The technology has held up, he says, and partner Akamai is building out content delivery networks around New Zealand to deal with the traffic crunch coming in September - which he concedes will be unprecedented.

Some of the pressure has been taken off as punters have digested the development that TVNZ will screen All Blacks pool games on a one-hour delay, and the semis and the final live, he says (though the Herald would add that while a safety net, the TVNZ coverage also crimps Spark Sport's potential commercial payoff).

Moutter says with the safety net of the World Cup semis and final screening live on TVNZ, the key point of stress will be the AB's Sept 21 game against their only strong pool opposition: South Africa.

He says, "Really, there's only one single match that's going to test us and that's the All Blacks-South Africa match [on September 21], which is earlier in the evening than the other pool matches [it will stream at 9.45pm NZT] and of course they'll be a high level of interest because of the quality of the opposition. The other pool games are later at night with less interesting opponents. And the semis and the finals will be live on TVNZ."

Moutter sees the media being overly critical, and says Spark Sport is not getting any love for its broader effect.

"The thing we're getting no credit for - and we should be - is the radical change and price drops that the incumbent has already delivered," he says.

"Our pressure has already pushed them back by $30 or $40 a month - just the threat."

Sky recently slashed the price of the company's Fanpass app, and has another shake up of the app, and Sky Sports channels, promised for August.

"Would they have done any of those things if a material rival had not appeared on the scene?" So already, even if you're a Sky customer, you're way better off?" Moutter asks.

That's true.

It's hard to see that Sky would have nearly halved the cost of Fanpass without Spark Sport's arrival.

But the effect is offset by the fact sports fans now have to buy two services. Rugby fans will need a Spark Sport Tournament pass and Sky Sport or Fanpass to get their fill. And US basketball and English soccer fans (from August) will also find some of their favourite team's games on Sky, and some on Spark Sport (which will stream next season's English Premier League matches while Sky retains the FA Cup, Uefa Champions League and other competitions involving EPL teams).

Advice for his successor

Moutter will be replaced on Monday by Jolie Hodson, currently the telco's customer director (profiled here).

Does he have any words of wisdom for his successor?

"She's an outstanding executive in her own right and she doesn't need my advice but I'm confident she'll carry on with that bold edge - making bold calls and backing it up with executional excellence, which has been the character behind the company's resurgence over the past few years," Moutter says.

"It's not an industry where you can solve your problems by doing a hundred small things. You've got to keep apace and if you don't the global heavyweights will win all of this business over time, so my advice is 'just be bold'."