Telco veteran Richard Moat breathes in the fresh Eir
The future is bright for Ireland’s biggest communications company, says the former Orange executive
Richard Moat CEO of Eir. Photograph: Aidan Crawley
Richard Moat, the no-nonsense Brummie who is chief executive of telecoms group Eir, has made his Irish home in perhaps the State’s most prestigious village – Dalkey in south Dublin – where he rents a comfortable pad near the waterfront.
Taking a walk last month, he bumped into Yanis Varoufakis, the celebrity former Greek finance minister and all-round handsome devil, just down the road from his house. “I thought to myself: ‘Wow, he is one of the most famous men in Europe. What’s he doing here?’ ”
Varoufakis was in town for the Dalkey Book Festival, a four-day extravaganza that is fast becoming a Web Summit for the literati. The festival was co-founded by David McWilliams, who might consider himself an Irish Varoufakis only with more hair and less motorbike fumes. Other speakers at the event included Bob Geldof and Malcolm Gladwell, the Tipping Point author.
Moat’s interest was piqued. Eir arranged for a camera crew to go to Dalkey and interview as many interesting people as they could find. The results will be posted online by the company in two weeks time.
Why would a telecommunications company dispatch a team to record interviews at a luvvies’ book festival? Welcome to the new media world, where content is king and the old order is being overturned, at times painfully but irresistibly.
Eir is no longer just an infrastructure company, or a telecoms network, or even a consumer brand. It is now also a content company and media platform.
“The book festival stuff is the first bit of content we’ve done, apart from sport,” said Moat. “We’ve never been in this world before. We’re dipping our toe into content, but our major focus is to make sports work.”
Last December, Eir agreed to pay in excess of €20 million for broadcaster Setanta Sports, with the deal clearing its final regulatory hurdle on April 1st. This month, it rebranded the channel as Eir Sport and announced it has secured the exclusive Irish rights to the 2019 Rugby World Cup.
Eir Sport is the linchpin of the telco’s new broadcasting strategy as it develops content to beef up its television services, The ultimate goal is to tempt more subscribers into its broadband package, delivered over a network embellished with €1.2 billion worth of new fibre, with another €1.3 billion to come.
Ideally for Eir, customers will sign up for the “quad play” bundle comprising landline, Meteor mobile, broadband and television. Broadband and fixed-line, however, remain the key products for the company.
The group has about 980,000 mobile customers currently and about 370,000 broadband accounts, including 190,000 high-speed eFibre subscribers, plus more than 50,000 television accounts.
Four years ago, it was all very different for Eir, then known as Eircom. It exited the largest examinership in the history of the State, writing off €1.8 billion from a staggering €4 billion debt pile and handing ownership to its lenders. Its fibre rollout was already underway, but Ireland, its only market, was a mess.
Six weeks after it exited court protection, Moat was appointed chief financial officer, before taking on the top job in 2014.
Fuelled by Ireland’s economic recovery, the opportunities afforded by Eir’s fibre roll-out and the sacrifices of staff who co-operated in a massive realignment of costs, the company’s fortunes have since been transformed. Revenues and profits are rising steadily, Eir’s balance sheet is fixed, and it is lining itself up for a possible stock market flotation in the next few years.
Moat seems proud of his work.
He has had a long and varied career to get to this point, taking him halfway round the world and back. A turnaround specialist, he has learned that, although businesses can be complex, business is quite simple, really.
“You’ve got a group of people and a bunch of assets. If the people are motivated well enough to use the assets intelligently, you’ll have a successful business,” he says.
Moat was born just outside Birmingham. His father worked for 43 years for an engineering business, working his way up from the shopfloor to management. Moat went to Cambridge and got a law degree, but he retains a touch of that quintessentially English, workman-like quality about him.
He trained as an accountant and worked in London’s insurance industry for Lloyds and Sedgwick, before joining Marathon and the oil industry in 1980.
He did 12 years with Marathon, first in treasury and then in the US doing auditing. But then the oil industry hit a crisis in the years after the first Gulf war.
“Oil was about $9 a barrel, and all our investments in the North Sea were uneconomic. People were getting laid off left, right and centre. I didn’t think the industry had a future, so I went looking for the next big thing.”
“Canning Fok [who remains Hutchison’s managing director] thought we were completely mad to call it Orange, but he went along with it.”
In the first few months, Orange picked up just a handful of customers, and Moat began to doubt that the mobile phone industry would work. But things picked up, and Moat was corporate finance director when it floated in 1996.
Hans Snook, his boss at Orange, forecast that mobile penetration would soon reach 25 per cent. Moat still doubted whether it could grow that fast.
“I thought ‘What’s he smoking?’. But it grew twice as fast as Hans predicted.”
“I started with just me and a piece of paper – the licence. When I left, there was 2,000 staff and one million customers. I thought ‘I’ve done well here, and I’ll get a nice job out of this.’ They gave me Orange Denmark.”
He says “Orange Denmark” like a kid who got a wooden trike for Christmas, when all his mates got PlayStations.
“It had been going five years and had never made a profit. Analysts said it had a negative enterprise value of £700 million.”
Moat turned it around in two years and sold the business. He next served five years as head of Orange in Romania, before returning to the UK to overhaul T-Mobile for Deutsche Telekom in 2009.
“Cultural challenges can be huge and they are different everywhere. Adapting yourself to them is probably the biggest part of the job. Ultimately, you’ve got to motivate the people who work for the business.
“I always threw myself into it. I haven’t had a failure yet. I’ve always had good relations with key stakeholders, wherever I went. I can’t really explain it, except to say it is something I’ve got in my skill set that’s really helped me.”
In what must be a career disappointment, Moat had to make do with the number two job when T-Mobile merged with Orange in 2010 to form Everything Everywhere, the largest network operator in the UK. He left the following year as part of a major management reshuffle.
A year later, he popped up as number two at Eircom in bailed-out Ireland. Having worked in top roles for some of the biggest global mobile brands, wasn’t that a bit like swapping a Mercedes for a Micra?
“Eircom was owned by private equity and hedge funds, and that attracted me because I wanted to see what it was like to work for them. The other thing was that it wasn’t a subsidiary of a big corporate.”
Moat points across the floor of Eir’s Dublin headquarters to its boardroom.
“All the decisions are taken in that room. We don’t have to phone anyone else up. That was energising. I also knew, if we could cure the company’s debt problem, it had a great future.”
There was a slight speed bump when Eir pulled a planned stock market listing in 2014, following which Moat took on the top role.The company is in decent shape now, however.
It has rolled out its high-speed fibre network to “pass” near 1.6 million homes, and Moat estimates it will hit 1.9 million sometime in 2018, ahead of a 2020 target: “By that point, we will have covered more than 80 per cent of homes and businesses. We will probably look to speed up that roll-out even further.”
Eir is considered a leading contender for the State’s National Broadband Plan (NBP) to bring subsidised high-speed fibre services to more than 900,000 rural homes. The tender will be awarded in two lots sometime next year, with Eir up against ESB and Vodafone’s Siro joint venture and also E-Net, backed by Granahan McCourt, John Laing and 3i.
Eir is engaged in something of an arm wrestle with the State over the NBP, as it has announced it will already “pass” 300,000 of the homes earmarked for the plan, which might force officials to scale back NBP under EU rules.
If Eir follows through with its plan to pass more rural homes, it could give it the edge when pricing its NBP tender. Moat rejects the notion that it has been aggressive in its approach, and says it will cut the cost of the NBP for taxpayers.
“We want to win both lots, but it is a competitive and a political process. Whether anyone can win both, that is up for grabs. If we don’t, we will take one and roll it out as fast as we can.”
Moat says he sometimes gets frustrated with the national debate around broadband rollout. He is at pains to emphasise that Eir’s network is far larger in scale than all of its competitors combined.
“That gets lost in some of the commentary when people are assessing who would do best with the NBP. It’s like we’re in a league, and you’ve got Manchester United. Then you’ve got Hartlepool, Grimsby and Luton, and the commentator says ‘Luton look like they have a chance’.”
The company is also pressing ahead with the roll-out of a further 450 4G sites for Meteor, as well as targeting 300,000 rural homes with superfast fibre-to-the-home (FTTH) broadband services. FTTH has so far reached about 34,000 homes.
“I understand people in rural areas get frustrated waiting, but it takes time to run the fibre. I think people’s perception of our roll-out will change once more areas get lit up by the network.”
The restructuring of Eir’s balance sheet that started with its examinership is now essentially complete. Moat recently raised a €500 million bond to refinance the last chunk of its most expensive debt. The original plan was to raise €350 million, but it kicked the number out after, Moat says, the order book went past €2.7 billion.
The rest of its senior debt doesn’t mature until 2022.
The company’s formerly disparate shareholder base, which once numbered about 200 hedge funds and banks, has also been trimmed, bringing extra managerial stability for Moat. GIC, a Singaporean sovereign wealth fund, has bought out many of the smaller shareholders, as well as some of the shareholding of York Capital.
About 80 per cent of Eir’s shares are now held by four blocs – Anchorage, which owns close to 40 per cent; GIC which has a little over 16 per cent; Davidson Kempner; and York.
Last month’s GIC deal gives Eir an enterprise value of €3.5 billion, Moat says, which is up from the offer it received from an unnamed bidder last May, valuing it at between €3.2 billion and €3.3 billion.
Moat says a flotation for the company looks, on the “balance of probabilities”, the most likely exit for Eir’s shareholders in coming years, although it depends on market conditions.
What, then, for Moat? A successful IPO would surely provide him with the payout of his career.
“I’m here for the foreseeable. Mary [his wife] likes living in Ireland and so do I. We’ve had four wonderful years here and we want to be here for a lot longer. I hope, one day, we will buy a place in Ireland and spend a large part of our retirement here.”
He’s not done yet, however.
Name: Richard Moat Position: Chief executive Eir Age: 61 Home: Dalkey, Dublin Family: “Married to Mary, who has two kids from a previous relationship, and so do I, so we’ve four children in total. My son got married in Yorkshire two weeks ago.”
Something about him that might surprise: “I have sung and danced in Baroque operas.”
Something about him we might expect: “I am meticulously organised.”