In at the deep end

THE FRIDAY INTERVIEWSTEPHEN SHURROCK Chief executive O2 Ireland:"Y'ALRITE," SAYS Stephen Shurrock in a chirpy Welsh drawl as we meet in the foyer of O2's shiny new building in Dublin's docklands on Tuesday. Outside, the weather matches the national mood. It's dark and tipping down. Indoors, it's lunchtime and there's a buzz in the ground-floor canteen as O2 staff top up their energy levels.

Shurrock himself is in top form. His beloved Wales finally won a rugby international, beating Scotland last Saturday, and the mobile company was preparing to branch into financial services yesterday with the launch of O2 Money.

It wasn’t Shurrock’s brainchild – he only took over from Danuta Gray in December – but it will be his first outing with the media here and a chance for him to make his mark.

O2 is offering a pre-paid money card. You load up to €350 on to the card, which you can then use to buy goods in store or online. It’s a credit card without the credit, if you like, but it will operate on the Visa platform.

It could be a hit in recession Ireland with punters who either want to budget carefully what they spend or who no longer have access to a credit card due to debt problems.

You won’t have to be an O2 customer to buy one but you will have to visit one of the company’s 70 retail outlets.

It’s a concept that O2 has operated in Britain and elsewhere, and Shurrock sees it as a “natural extension” for the Irish business, particularly as it has more than 1 million pre-pay phone customers here.

“When I left the house this morning, I left with my phone and my wallet,” he says, sitting at a glass-topped table on the fourth floor of O2’s open-plan office. “Those are the things you don’t leave home without. We absolutely see the wallet and the phone coming together and we think you will have a mobile wallet as things go forward.

“This is a very natural extension for us. Things that are important to customers are, yes, making a call, sending a text and updating their Facebook status, but also, in the future, making payments. Also perhaps purchasing tickets and storing tickets. It’s a very logical step for us to be getting into this space.”

O2, like all mobile operators in Ireland, is having to work harder these days to make a buck. Its average revenue per user (Arpu) for the first nine months of 2010 fell by 6 per cent to €37.14. The decline among its post-pay customers was 12 per cent, double that of pre-pay.

Third-quarter revenues fell by 7 per cent to €198 million. All this was in spite of a small rise in the average number of minutes used by customers each month. In essence, punters are paying less for more.

The only bright spot is that data revenues are rising as a percentage of the overall business. With smartphone usage on the rise, this is good news for mobile providers.

“The Arpu in the industry is going backwards because of where we find ourselves in the economy and because it’s a very competitive market,” Shurrock says, “[but] I think there’s an opportunity for us across Europe and in Ireland in data. I really think we’re on the cusp of a data explosion. You’re seeing more and more smartphones being sold and more tablets coming into the market.”

The catalyst, Shurrock adds, will be keener pricing, both in terms of kit and data costs. “Towards the end of this year you will see a $100-ish smartphone and that will open it up to more customers. You’ll see more and more cheaper product come through.”

But what about the price of data usage and roaming? Data roaming abroad is eye-wateringly expensive and many smartphone users have had a shock on receiving their phone bills after a holiday or business trip overseas.

“You’ll see a number of operators make changes to their bundles as we go through the next couple of quarters,” Shurrock predicts. “We’re in the process at the moment of looking at what we can do to make those data charges clearer for customers and give them some options of what they can purchase when they’re going abroad.”

However he accepts that “price could remain a barrier” to adoption.

Overall though, Shurrock insists that Irish consumers are getting “good value” from mobile phone companies.

In spite of the recession, O2 is well placed in the Irish market. It has 1.7 million subscribers, making it number two behind Vodafone. It also has 160,000 broadband users, a fixed-line division focused on small and medium-sized companies and two big sponsorships – Irish rugby and the old Point Depot (now called the O2).

“The growth we’re looking for now is with existing customers in terms of introducing new services, be it data, financial services etc. There are no real new customers in the market now,” he concedes.

O2 has undergone its own restructuring, shedding about 50 jobs last year and closing four retail outlets (three in Dublin and one in Donegal town) that weren’t earning their keep. Other shops were transferred to franchisees.

With the Irish economy likely to see little growth over the next two years and three more hairshirt budgets coming down the line, will more restructuring be needed?

“Change will always be in our business, that’s absolutely for sure. The shareholders want to make sure that they get an adequate return on their investment, but I think the business is on a really solid foundation right now.”

The Welshman was sanguine about the argy-bargy O2 had last year with ComReg and consumer groups over forcing billpay customers actively to “opt-out” of being transferred to e-billing.

“It’s a tricky one to answer not being here at the time,” he says defensively. “I really think consumers are moving towards online but if people want to receive a paper bill, fair enough.”

He says about 70 per cent of the 120,000 consumers transferred to e-billing last year have remained with the online version.

Shurrock hails from Swansea in south Wales. “It was a lovely place to grow up, close to the sea,” he says. He studied at Loughborough University in Leicestershire and qualified as a management accountant.

His early career involved stints at Viag Interkom, a phone company in Germany now owned by O2, and Excite, a web portal in Britain, before he hooked up with O2 in 2000.

Shurrock filled financial roles, initially at the mobile group, but made the break into sales six years ago. He was consumer sales director for the past three years before landing the Irish gig.

Why did he want the job? “From a career perspective, I had ambition to move into a CEO role. It was great to have that opportunity to do so. Clearly I knew the market was tough and very competitive but it’s a great challenge.” Indeed it is, but if Shurrock can make a decent fist of his role here, his future should be bright within O2’s Spanish parent Telefónica.

After 10 years in dreary Slough – made famous in recent years by David Brent and the Office on BBC – Shurrock is enjoying life with his wife and three young children in Dublin.

“It’s lovely to live by the sea again. The kids love spending time on the beach at the weekends.”

His children, who were born in England and range in age from three to six, have even started playing Gaelic games.

“The older one is starting to get into it now . . . I’ll have to learn the rules.”

Like most Welshmen, Shurrock is passionate about rugby. He played at number 8 and was captain of the school team. Behind his desk, which looks out on to the Liffey and across to the new national conference centre, there’s a life-size cardboard cutout of him wearing the Welsh rugby kit, holding aloft the Six Nations trophy and grinning from ear to ear.

It was a gift from his colleagues in Slough before he left for Dublin.

“I keep expecting it to be defaced some day with a green hat or a scarf or something,” he says with a chuckle.

So who will he be cheering for on March 12th when Ireland, sponsored by O2, play his native Wales in Cardiff. “I absolutely will be wearing my Wales jersey,” he says with a broad grin, “but I’ll be cheering for Ireland in every other game.”

On the record

Name: Stephen Shurrock.

Position: Chief executive O2 Ireland.

Age: 39.

Lives: Glenageary, Co Dublin

Family: married with three children

Hobbies: "I love watching sport, particularly rugby, and spending time with my kids at the weekend."

Something you might expect:"I am a passionate Welsh rugby fan."

Something that might surprise:"I swam competitively up to the age of 14 and won medals in the Welsh championship."