Moat rings the changes at T-Mobile

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Aspects of T-Mobile’s recent performance stand out, and show parent Deutsche Telekom hired a skilled ‘hatchet man’ when it drafted in Richard Moat from Orange Romania as T-Mobile UK managing director in June last year.

The month before Moat joined, the Deutsche Telekom board had just written off €1.8 billion from the value of its UK business, and reportedly invited bids for the unit. Certainly Moat’s punchy brief was to sort it out, whether that meant by organic means in the first instance or by some third-party arrangement.

And the surest measure of his success so far is T-Mobile’s profit margin, which has started to climb sequentially – from 13.6 per cent in the first quarter of last year, to 17.2 per cent in the second quarter and 21.4 per cent during his first term in charge.

Profit margin is a way off its late 2008 equivalent (22 per cent), but its rivals margins have slipped since also and it is a markedly different sector now, in which UK protagonists’ expectations have changed.

But the effectiveness of the ‘value-led’ strategy Moat has put in place at T-Mobile is emphasised by the fact UK profit and profit margin increased in the third quarter even when UK revenues were marginally down, both annually and sequentially, and its customer base was also down year-on-year.

Its ARPU in the period led the market at £40.20 – O2 and Vodafone placed behind its joint-venture partner Orange as well. And as Moat points out, T-Mobile remains market leader for both contract and prepay volumes in the capital and the second city.

Ultimately, rising profit margins bear out the business futility of the programmes he has cut from within T-Mobile’s Hatfield headquarters, and the corresponding value of the elements he has protected and promoted.

Moat, considered by the market to be serious-minded and demanding of colleagues, stepped out at T-Mobile’s independent partner conference at the Oxford Belfry to address delegates, essentially to reassure them of the indirect channel’s importance to its pending joint-venture with France Telecom’s UK Orange operation.

In a dawn meeting with Mobile News, Moat suggested, indeed, the past six months have proved an internal solution to T-Mobile UK’s slump could have in the short-term bought Deutsche Telekom some time at least, had the project with Orange not been put on the table. It is something Moat fought for in early discussion with the board on his appointment.

Full article in Mobile News issue 457 (February 1, 2010).

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