The Friday Interview: Perlico chief executive, Iain MacDonald, was a busy man last week. On Tuesday, he signed a deal to sell his fixed-line telephone and broadband group to Vodafone for up to €80 million, writes Ciarán Hancock
MacDonald's share of the spoils is an initial €6.4 million and a potential add-on payment of €9.6 million if certain targets are met over the next few years. Not bad for a 30 year old.
At the weekend, he and his wife Anna celebrated their first wedding anniversary.
So, did he splash out on a diamond necklace to celebrate his windfall? Or a flash car perhaps?
"No," he says giddily. "She likes painting so I bought her some art materials."
He might just have become the newest member of the 35,000-plus millionaires' club in the Republic, but MacDonald is keeping his feet firmly on the ground.
"This (the sale) isn't an end point for me and it's not a pinnacle in terms of developing the business," he says. "We've still got a very exciting job to do and that's what I'm focusing on for the time being."
As part of the deal with Vodafone, MacDonald is staying on as Perlico's boss.
He accepts that life as part of a large, heavily-structured public company will be very different and that if things don't go to plan, he could end up being shown the door by his new employers.
Perlico has 62,500 customers, 25,000 of them broadband users. With the mobile market at saturation point, Vodafone, which has 2.2 million subscribers here, is looking for a new angle.
Vodafone plans to offer a "total communications package" to customers, who will be able to buy mobile, fixed-line and broadband as a bundle for the first time.
Perlico will retain its independence and cross sell Vodafone's services and vice versa.
The price tag is tasty and raised more than a few eyebrows in the industry. Perlico has yet to turn a profit. It is projected to earn revenues of €40 million this year and record a net loss of €7 million.
MacDonald said this was due to large investment costs, including a €4 million IT platform called Single Serve.
As an independent group, the plan was to grow sales in 2008 to about €70 million and post a bottom line profit of €2.5 million.
"We always wanted to develop a large significant business and our game plan was to turn to profitability in 2008," he says. "We were fully on track for doing that." Now that it is under Vodafone's umbrella, those projections are being reworked upwards, he said.
MacDonald's rise through the ranks has been rapid. He was educated in Blackrock College and UCD, where he took economics and information studies.
He spent about five years working here as a salesman for Intergraph, a Nasdaq-listed software company before striking out on his own and founding Perlico. "I'd always wanted to build a business, I'd always had a desire to be an entrepreneur."
The young Dub is from entrepreneurial stock. His paternal grandfather was a fairground operator who moved here from Scotland as a young man and established the attractions in Courtown, Co Wexford. He also ran pubs and restaurants in the area. "He felt there was an opportunity in the Irish market," MacDonald says.
His father was a banker, first with ICC and then Bank of Scotland and has been Perlico's chairman since inception.
MacDonald set up Perlico at a time when telecoms deregulation was happening at a painfully slow pace and broadband was only beginning to gain traction.
His plan was simple. Perlico would wholesale Eircom's fixed-line and broadband products and back it up with effective, carefully targeted marketing and excellent customer service - a model perfected by computer maker Dell. "That's where I felt the gap was," he says. "A lot of companies had given it a go but I didn't thing anyone was doing it well. Most importantly, we didn't bet the business on local loop unbundling."
It started slowly. In 2004, he began cold calling businesses around the Sandyford area and offering them calls at a reduced rate. He got about 100 customers.
"At the beginning of 2005 things began to change," he recalls. "Simple things. The price of broadband started to come down, single billing came in and flat-rate internet access.
"All of that was driven by the Government saying there has to be competition and there has to be broadband. That's when we started to get a bit of traction."
Around that time, MacDonald put about €100,000 of his own money into the company and persuaded some family and friends to cough up €250,000.
Revenue of €4 million in 2005 grew to €20 million last year and will double in 2007. Mobile was the next obvious move for Perlico. It signed an agreement with mobile firm 3 earlier this year and considered entering the market as a virtual player.
The Vodafone deal puts that to bed. It is now part of a group that has 45 per cent of the lucrative mobile market here and MacDonald is confident that it can offer an attractive bundled services to customers.
MacDonald comes across as a highly efficient manager. Perfectly groomed with a slim frame, he carries the air of a well-organised administrator. His talents were sufficient to garner the backing of Dr Michael Smurfit and Kingspan founder Eugene Murtagh.
He is rightly proud of the fact that he's built a business that now employs 67 staff and is part of one of the biggest telecoms groups in the world.
Yet he doesn't strike you as a stereotypical entrepreneur - somebody who is constantly looking for an angle. "I'd consider myself to be a professional high-growth manager," he says.
His working day starts at 7.45am and finishes at about 6.45pm. He works weekends, too. "It's been tough to develop the business but I like it."
MacDonald is an ambitious fellow and you could imagine him heading Vodafone's Irish operation some day, a role currently held by Englishman Charles Butterworth. Is that a personal goal?
"No, I don't have my eye on that job. The job for me to do now is to continue to develop this business and that's what I'm totally focused on."
ON THE RECORD
Iain MacDonald, Chief executive of Perlico
Age:30
Family:Married to Anna
Lives:Monkstown, Co Dublin
Why he is in the news:He sold Perlico to Vodafone last week for up to €80 million.
Something you might expect:He is a member of the Fitzwilliam Lawn Tennis Club in Dublin and the National Yacht Club.
Something that might surprise:He likes sailing and windsurfing and heads to Achill Island every year with friends to play the bodhrán. "It's nice to get a break from the routine."
