THE FRIDAY INTERVIEW/Chris Clark, chief executive, BT Ireland:CHRIS CLARK, BT's man in Ireland, could be forgiven for feeling undervalued. The all-Ireland division of the former British state telecoms company posted an impressive set of half-year results last week. Revenue was up 5.4 per cent to €486.6 million, earnings grew 13.5 per cent and margins increased by 10 per cent. It was one of the few bright spots in the group's results but was overshadowed by Ian Livingston, BT's chief executive, announcing that he was looking to trim the workforce by 10,000.
Naturally, the media wanted to know what the impact on BT's 2,000 staff in the Northern and 1,000 in the Republic would be.
"We have been rebalancing our workforce - we have moved people out of the classic field engineering into IT areas - for a couple of years now," explains Clark. "As long as we execute our strategy and deliver our numbers, we won't have to take drastic action."
BT as a group, and in Ireland, has been diversifying into related areas for a number of years because management realises that traditional telephony services are becoming commoditised. Through the 2005 acquisition of Cara (once Aer Lingus's technology division) for €15 million, as well as the hiring of some senior executives, BT has built up a significant technology services business.
"Our business in the Republic is much more of a business-to-business one than people realise," says Clark, revealing that over 60 per cent of Irish revenues come from business customers. "It is the IT services and the add-on to network services that are really growing because it does drive efficiencies for customers," he says.
Clark talks about "inventory management" and other concepts that would have seemed alien to a telecoms executive in the sector's heyday of the late 1990s when growth was the mantra. He attributes the recent improvement in margins to reducing the cost of sales, keeping a close eye on the mix of products the telco is selling and "not chasing a euro at any cost".
This makes it sound like telecoms has become a mature, stable business. Perhaps that's the case in some larger markets, but telecoms in Ireland is still in flux, something Clark acknowledges.
"When have [things] ever stopped being up in the air?" he asks with just a touch of humour.
Mention that Eircom's majority owner Babcock Brown Capital has effectively put the former State telco up for sale elicits an interjection. "Do you want me to categorically deny again that BT is interested in buying Eircom?" he asks rhetorically.
Previous denials took place in the context of a very different market. In the current climate, Eircom could conceivably be sold at a rock-bottom price?
"It's still got €4.5 billion of debt which is half of BT Group's debt and we're a €22 billion business," counters Clark. "Even strategically, here our focus and strength is our network and IT services capabilities. We play in a different league to Eircom. Their market share has got only one way to go - we know that having been the former incumbent in the UK."
He's also critical of the quality of the former incumbent operator's network. "We couldn't offer some of the corporate services we do on the back of their network," says Clark.
Given the potential impact another change in ownership at Eircom might have on the 40 per cent of BT's overall revenues derived from the public, Clark seems sanguine about Eircom's difficulties. "I'm less concerned about that than the uncertainty in the market generally that it has caused," he says. "Not for BT but for Ireland Inc. It's not a criticism of any individual or company but uncertainty is never a good thing, particularly in difficult times, because it does slow down investment."
The former State-owned network has been the victim of underinvestment by successive private owners and Clark believes any new owners will have to invest heavily - something that is difficult if not impossible in the current climate. He maintains that regulator ComReg is doing its bit to increase competition and encourage investment.
"The regulator is doing all the right things. It is just that people make it difficult for them," he says in a thinly-veiled references to Eircom's recent legal challenges to ComReg-enforced price cuts.
Clark took up the reins at BT Ireland in July 2007, replacing Danny McLaughlin, a 36-year veteran of BT. Clark too has put in his service with BT having joined the company straight out of college in 1991. His predecessor's legacy was the integration of BT's interests on the island into a single unit, BT Ireland.
That creates potential for corporate schizophrenia as in Northern Ireland BT is the former incumbent, while south of the border it continues to chip away at Eircom.
"I'm a regular user of the M1," he jokes before conceding that BT is perceived very differently North and South.
"People naturally think we're the former incumbent, a utility that only does plain old telephony services," says Clark of BT's reputation in the North. "What really has changed is that people are realising BT does a lot more than that. And actually our share is a lot less than people realise."
Increasing revenues are coming from broadband, TV services over broadband, and a mobile broadband service for consumers. In the business space, just as in the Republic, IT and network services are the engine of growth.
While BT has invested heavily in Ireland, previous occupants of Clark's office have been critical of the amount of Government business they won here. Over the summer, BT pulled out of the National Broadband Scheme (NBS) and was critical of how the tender was being run. Despite this, Clark insists relations with the public sector are "much better".
"There's still a lot more to do but we're definitely starting to get traction in the public sector and not necessarily in the traditional network stuff but with IT services," says Clark.
The silver lining with the NBS contract is that BT still retains an involvement as a sub-contractor to 3 Ireland, one of two remaining bidders. Similarly BT is the network provider for Boxer TV's roll out of Ireland's digital terrestrial television service.
"When you look at big deals, no company has the assets to do everything themselves," says Clark. "It's about understanding what your sweet spot is."
Knowing your sweet spot and executing efficiently may not be enough in the current environment. Although he concedes things are going to get worse before they get better, Clark seems to be optimistic.
"Life is tough, but we all have to be careful about not talking ourselves into a complete depression," he says. "I'm a great believer in it all being about balance."
