Saturday 21 April 2018

Interview: 'Chief storyteller' Ronan Dunne gears up to write a new chapter at Verizon

The former CEO of O2 tells Dearbhail McDonald about bouncing back after the takeover deal he championed was scuppered by Europe

Ronan Dunne
Ronan Dunne
Dearbhail McDonald

Dearbhail McDonald

Ronan Dunne was relaxing at his home in Surrey early last May when he received a phone call from José María Álvarez-Pallete López, the chairman and CEO of Telefónica, the massive, if heavily indebted, Spanish telecoms provider.

Dunne, the Dublin-born CEO of British mobile giant O2, owned by Telefónica, was in flying form. The Blackrock College-educated accountant was just about to go out on a high with the £10.2bn takeover of O2 by CK Hutchison, the owner of rival mobile operator Three.

The deal was subject to approval by European Competition Commissioner Margrethe Vestager, but the initial signals were positive.

When he answered the call, Dunne - who planned to depart as CEO of O2 once the merger was confirmed - thought he was going to deliver an outcome to his Telefónica boss that was "tied with a bow at the end".

Instead, Álvarez-Pallete López, then attending a series of meetings in Brussels, delivered the crushing blow that the deal was in trouble, possibly dead.

"The breath was taken out of me, I just stopped in my tracks," said Dunne, who tomorrow morning takes up the role of executive vice president of Verizon Inc and group president of Verizon Wireless weeks after the US telco - with almost 143 million subscribers - purchased Yahoo's core business for $5bn.

"I was absolutely flabbergasted," says Dunne, cradling the new US visa in his Irish passport days before he flew to his new home in New Jersey. "For two days, I was a bear with a sore head, I didn't know which end was up. I was completely thrown by the whole thing".

Vulnerability is not a trait normally associated with Dunne who, during his tenure at O2, grew its customer base from 18 million to 25 million whilst reducing its employee base from 15,400 to its current 7,000.

He was vociferous in his attacks on UK regulator Ofcom, which lobbied against the merger, arguing that the regulator failed to take into account the dominance of BT and its mobile operation EE.

Dunne argued that its ownership of some 40pc of the mobile airwaves put Britain "next to Venezuela" in terms of the strength of its former state monopoly.

He also railed against plans by EE to increase coverage for consumers hand-in-hand with a British government contract to provide communication for the country's emergency services.

Dunne was also one of the most prominent business leaders in the UK who campaigned against Britain leaving the European Union. He was one of 200 leaders - including 36 FTSE 100 bosses - to lend his weight to a letter to the London Times calling for Britain to stay in and secure unrestricted access to the European market of 500 million people.

On the failed O2/Three merger, Dunne is characteristically upbeat.

After his two-day shock, he says he got back on track for the sake of his employees, whose chief concern was whether they would have a job, who they would be working for and whose name would be above the door.

"Business people get paid for getting off their backsides and dealing with whatever the reality is," he says in the Panama Room of Telefónica's Air Street HQ in London. "We don't have the luxury of a wish. I had to seize the initiative and get back in charge of the agenda".

Dunne asked Álvarez-Pallete López to give him a few weeks to carry out a strategic review.

Within days of the formal announcement that the merger had been blocked, Dunne had been contacted by "every large private equity firm in the world".

The media feasted on rumours, not entirely off the mark, of an £8.5bn management buyout attempt following the collapse of Hutchison's takeover bid.

Bunkered down in Twickenham with his management team, in the days following the Commission's announcement, Dunne says the immediate priority was O2's employees.

The last 18 months had been exceptionally difficult for the CEO, who says he tends not to get stressed.

"Feeling personally accountable for every single soul on this ship in circumstances where you don't know where the ship is going to finish was emotionally massively draining," he says.

"The notion of somebody who is just going to come in, load the place up with debts, strip out cost and probably effectively undermine everything that we stood for was not very attractive.

"However, I have a fiduciary responsibility to the shareholders, so what I tried to do was go through all of the private equity firms and identify those who had a genuine growth agenda".

In the end, Telefónica's preferred option is an IPO, with Álvarez-Pallete López confirming last week that O2 could now list by the end of the year.

One of the most stunning moves Dunne made as O2 chief executive was to secure the exclusive rights to the iPhone in 2007.

Then the global recession took hold. Had it not been for the iPhone deal, the mobile operator may arguably have lost serious ground to its competitors.

The hardest yard for Dunne in O2, where he had previously served as CFO before becoming its CEO in 2005, was four years ago when O2 suffered a major network outage.

The network went down for 19 hours and 17.9 million customers lost service and the company fielded hourly calls inquiring about his resignation.

It was, Dunne recalls, his "Kipling moment," a reference to the poet Rudyard Kipling's poem, If and its famous opening line about keeping your head when all about are losing theirs.

"It made it really clear to me what sort of leader I am and that is calm in the eye of a storm," says Dunne, who braved an upfront apology on Sky News (one of its customers) within hours of the crisis.

"It was also a real lesson in authenticity, being yourself and being prepared to own the agenda rather than simply have other people set the agenda for you."

Authenticity is the trait that tempers what would otherwise be Dunne's passion - bordering on an evangelical zeal - for O2, which he describes as "a brand that runs a business not a business that operates a brand."

"What we have got in here is such a vibrant culture that my biggest sensitivity around the whole sale transaction was would O2, the DNA, survive."

On the future of data, Dunne said society will soon reach a tipping point where citizens - rather than companies such as Google and Facebook - will insist on control of their data, including location-based services.

Will telco firms such as Verizon become de facto data brokers for customers in the future?

"Trusted partner to your digital life," is Dunne's diplomatic response.

Leaving London for a new life in New Jersey, home of Verizon, Dunne says he is happy that O2's DNA is intact as he undertakes "the single biggest job in mobile in the world".

Dunne, who has been headhunted for roles within and beyond the telco sector, says he was a rank outsider for the role of group president of Verizon Wireless, a move that could put him in line as its future CEO.

After several meetings in New York with John Stratton, executive vice president and president of company operations, Dunne warmed to the opportunity.

Stratton even travelled to Slough after Dunne said Verizon should see him in action rather than rely on his interview.

But the final say on the matter went to Dunne's wife Elaine, whom he met at Touche Ross (now Deloitte) during an audit when the pair were trainee accountants. Dunne was due to study law. However, due to an examiners' strike, his Leaving Cert results arrived late and he opted to join Touche, as he waited for his results.

He met Elaine, "the boss" in a filing room and the rest is history.

The couple have an only child, Charlotte, an accomplished hockey player who has just graduated with a double first in business and economics from Trinity College Dublin and is now contemplating a career in business.

"When I took over as the boss [of O2] and I stood in the atrium in Slough and I talked to people for the first time, I said my job is to be chief cheerleader and chief storyteller and my responsibility is to make each one of you the success you deserve to be and I have tried to live by that every single day," says Dunne.

"My approach to parenting is largely the same.

"I just need to do everything I can to create the environment in which Charlotte can be the success she deserves to be."

Dunne describes himself as a "very traditional" family values guy and gets emotional when he recalls how O2 recently flew his 87-year-old parents to the UK for a surprise going away party.

"I don't mean that in the narrow sense of Catholicism but I have very Christian values. Responsibilities, family that is hugely important to me".

"You know that parable of the talents?" he asks.

"If there is something you can do, you have a responsibility to use it for everybody's benefit.

"I don't mean it in any way in a pious way but I love the sense of making a difference, of that sense of that you work hard to place your DNA in something that says it was different because I was there".

As he prepares for a new life in New Jersey, where he will be responsible for all aspects of Verizon Wireless, including marketing, network operations, customer service and digital operations, the rugby enthusiast is retaining strong links to Ireland.

He says he is an immensely proud Irishman and believes last year's marriage equality referendum will stand as the "defining act" of the last 100 years.

"It defines the new Ireland," says Dunne, who says the country needs to seize its own agenda in the forthcoming Brexit negotiations. He worries most, post-Brexit, about the prospect of a recreation of a physical border between north and south.

"The social as well as the economic impact is really worrying and it's hard to contemplate exactly how that will be dealt with," he says.

"What Ireland has to do is set its own agenda and not simply be tossed in the high seas by everybody else's agenda," says the committed Europhile, adding that Ireland has been "completely transformed" by its relationship with Europe.

"Ireland needs to determine what are the important things for it to set its stall out, it might only be two or three things that we die in a ditch for, rather than have an opinion on 100 things that really don't matter."

Dunne is reluctant to join the debate on the cult of Steve Jobs, the admired - and widely feared - Apple founder. But he is effusive about Jobs's successor, Tim Cook, "an exceptionally authentic leader".

"Tim has taken an iconic business with a really strong and perhaps overtly dominant leader and taken ownership of it. I think that's hugely admirable."

Dunne says he believes what Verizon is buying into is the "O2 story", a story crafted under his leadership.

Whatever the ending, it is a remarkable new chapter for one of Ireland's most eclectic CEOs.

'I play golf and watch far too much rugby'

The best career advice I ever received...

“Only recruit people who will be better at doing the job than you would be — that will free you up to be a leader.”

In my time off...

“I play golf, fire up the barbecue and watch too much rugby. . . although those Aviva debentures might have to go to my daughter.”

My music tastes are...

“Eclectic — in the car currently [it’s] Michael Bublé, U2 and Supertramp.”

The last book I read was...

“You’re in Charge: Now What? by Thomas J Neff and James M Citrin and New Jersey Anthology by Maxine N Lurie.”

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