EE CEO reflects on a triumphant 18 months at the helm of the UK’s largest mobile operator
EE CEO Marc Allera has only been in the top job for 18 months, but it appears he is continuing the good work from his predecessor, and then some.
Allera took over in January 2016 during arguably the mobile operator’s most hectic and crucial period in its seven-year history.
At the start of January 2016, Olaf Swantee, who had led EE since 2011, announced he was stepping down to “pursue new opportunities”.
Allera, chief commercial officer (CCO) at the time, stepped into the hotseat when the deal for BT to acquire EE for £12.5 billion was completed on January 29. It was later revealed the mobile operator’s new parent company was retaining the EE brand.
A restructure was quickly underway, with the mobile operator announcing chief marketing officer Pippa Dunn and Neal Milsom were leaving. The integration of the two companies’ staff, IT and systems processes began in earnest, with Allera revealing last June that EE would close its offices in Paddington and move to the BT Centre before the end of 2016, as part of £360 million efficiency savings.
Allera was filling huge shoes – Swantee had been at EE since 2011 and oversaw the merger between Orange and T-Mobile to form what is now the UK’s largest mobile operator.
At a time when EE needed stability, and at a time of such drastic change, the company needed someone who knew the business from top to bottom – Allera was a ready-made fit.
He has amassed 16 years of top-level experience in the UK mobile operator space, having spent more than a decade at Three in CCO and sales and marketing director roles, before moving to EE in September 2011.
Onwards and upwards
Based on EE’s performance and standing among its peers, the industry veteran appears to be continuing to build on the strong platform that Swantee built, while implementing his own improvements to ensure EE always stands out as the top UK mobile operator.
This is evident for its most recent financial results, accounting for the first three months of this year and the year ending March 31.
It reported a three per cent year-on-year jump in revenue for its fourth quarter to £1.259 billion – reflecting the second consecutive quarter of growth – with profits surging by 27 per cent to £316 million.
EE added 192,000 contract customers in the three-month period to take that base to 192,000, while the number of people signed up to a 4G deal rose to 18.6 million following the addition of 400,000 users. Coverage of this technology now extends to more than 80 per cent of the UK land mass (99 per cent 4G population coverage).
In the full year, revenue increased marginally by a percentage point to £5.090 billion, with profits rising six per cent to £1.156 billion.
More for more
In an exclusive interview with Mobile News following the publication of the financial results last month, Allera was in buoyant mood and happy with the company’s continued improvements.
“You can see from the numbers that we are reasonably pleased with how things are going at the moment,” he says.
“This is the second consecutive quarter of growth and first time in the consumer unit that we have managed to achieve revenue growth. That is really pleasing.
“Driving that is a very successful ‘more for more’ strategy, which is providing customers with good price plans, we’re putting in good data bundles for them, content such as Apple Music and BT Sport, working with our device manufacturer partners to make sure we execute good handset launches.
“Despite the market being very competitive at the moment, I’m pleased that we are managing to put some profitable revenue growth into the business.”
Integration
Allera also provided an update on the integration between the BT and EE businesses – more than a year after the multi-billion pound deal was completed.
He says this is progressing well and it has got them off to a “very good start”, with plenty of examples of this working as planned.
Last July, EE made the BT Sport mobile application available to its new and upgrading contract customers, providing them with six months free access to it.
This provided them with a full line-up of the telecoms giant’s sports channels – BT Sport 1, 2 and Europe, as well as ESPN, with coverage including every match in the UEFA Champions League and Europa League, 42 Premier League matches, the Emirates FA Cup, Aviva Premiership Rugby, Moto GP, and Ultimate Fighting Championship (UFC).
In September, BT Sport brought virtual reality to four EE flagship stores in London as part of a new trial. Visitors were able to watch a Premier League football match between Chelsea and Arsenal using the technology through headsets that were provided. BT Broadband products are also available in a number of EE stores.
Although Allera is pleased with the how the integration of the two companies has progressed thus far, he warns that much hard work lays ahead to ensure that this is as successful as it possibly can be, and could take up to four years before it is all completed.
“The integration is going well,” he says. “From a network perspective, we are going to create a converged network of mobile and fixed line. We are in a great position to achieve that as we have both mobile and fixed line networks already, but they are running separately at the moment.
“Over time we have the resources to bring them closer together, providing continuous coverage and a great customer experience.
“Systems and IT – these things take time, as will the ability to serve our customers and provide them with a more consistent experience across multiple products and brands.
“Our business performance is progressing well, so we certainly haven’t lost momentum and if anything we have gained momentum since the merger was completed.
“We’re looking at three or four years for the integration work to be completed but what has been delivered in the first 18 months has got us off to a very good start.”
Cutting complaints
When Allera took over the reins improving the EE’s customer service levels were a priority, which had arguably suffered as a result of the merger between Orange and T-Mobile.
For example, in Q1 2013, EE was the most complained about mobile operator, with regulator Ofcom receiving 0.18 complaints per 1,000 customers. Three was a distant second at the time with 0.14 complaints per 1,000.
However since then, EE has seen a steady decline in the number of complaints (see graph), to the point that of the four major mobile operators it was the second least complained about in Q4 2016 with four per 100,000 customers, just behind O2 (three per 100,000).
That, in part, has been driven by a number of moves Allera has made to improve customer service levels at the mobile operator.
Last July, it completed the first stage of its pledge to onshore all of its customer service calls, with contract customer calls now being answered in the UK and Ireland, with plans to create a further 550 customer service roles before the end of the year.
The next phase included recruitment drives for 130 new roles in North Tyneside, 130 in Darlington, 140 in Plymouth and 150 in Merthyr Tydfil to provide the staff to handle all EE Home Broadband and prepay customers service calls.
In January, EE announced that it had become the first UK mobile operator to bring all customer service calls to the UK and Ireland, with all contract, prepay, broadband and TV queries being answered by staff in those regions.
In April, EE announced a further recruitment drive that will see it hire over 800 contact centre advisors for its sites across the UK. From this number, 100 apprentices will be hired as part of its apprenticeship programme.
Momentum
“We’re very pleased with the progress we have made in customer service and the momentum that has built for us,” says Allera.
“That is one of the areas I wanted to see a step-change in during my time as the head of this ship and bringing all of our customer service operations back to the UK and Ireland was the first step in achieving that.
“We’ve seen the immediate impacts from that. Customer satisfaction levels at our call centres are at an all-time high, complaints to Ofcom are at record lows and we have seen our customer net promoter scores (NPS) have improved quite considerably.
“Delivering more personal experiences is what we are all about – you can’t do that by having multiple call centres all over the world.
“We’re not just hiring anyone – we need the right people – but it is progressing and within the next few months, we will have filled the full complement of roles vacant in the business.
Allera has now set his sights on being the best for customer service and topping the list of least complained about UK mobile operators to Ofcom within two years.
Customer satisfaction
Despite the vast improvements in EE’s customer service and complaints levels, Allera still wants more from his teams and admits the operator still has work to do.
“We saw churn of 1.1 per cent in our most recent financial quarter, which is a consistent low level. That compared pretty well against our peers and provides an indication of how less likely they are to leave us.
“The customer satisfaction scores are the highest they have been but not as high as I would like them to be. We still have work to do and I think we can be the best within the next couple of years.”
Since its inception, EE’s mobile network – in regards to coverage and how much of the UK that covers – has also been high on the agenda.
As of March 31, EE has 4G geographical coverage of 80 per cent (99 per cent population coverage), having risen by a third from 60 per cent a year earlier. In 2015, it announced it was investing £1.5 billion in its network over three years.
The mobile operator maintains it is on target to hit 92 per cent 4G coverage by the end of this year, meeting a government target set in 2015. It is also continuing to work on its ambition to increase this figure to 95 per cent by the end of 2020.
To achieve this network expansion, EE is upgrading more than 100 sites to 4G every week. Some of these add new coverage and some increase signal strength, capacity and reliability in areas with existing coverage.
The strategy appears to be working. In April, network testing company RootMetrics revealed data that EE provided the most 4G coverage in 13 of the 14 metro areas tested, with 90.7 per cent coverage in London, 89.1 per cent in Edinburgh, 86.5 per cent in Cardiff and 98.1 per cent in Belfast.
In separate findings, after testing thousands of locations during the second half of last year, RootMetrics also awarded EE the accolade of ‘Best Overall Performance’ in England, Wales, Scotland and Northern Ireland, and as a result, the UK as a whole.
Improving coverage in rural areas or ‘not spots’ continues to be a hot topic, and in February EE demonstrated how it will use its patent-pending balloon and drone ‘air masts’ to connect the most remote parts of the UK.
It showed how it can use mini mobile sites attached to a helium balloon – a ‘Helikite’ – to provide wide area 4G coverage where permanent sites have been damaged or in areas where there is no 4G coverage. This technology is expected to be deployed before the end of this year.
EE also showcased the use of drones equipped with mini sites, each including a base station and antenna, that could be used to provide targeted coverage, including in search and rescue operations.
Making progress
Allera beams: “We have announced 80 per cent geographic coverage – that is the metric we track now as opposed to population coverage. Our mission is to cover the country where all our customers use 4G and until we have got to 95 per cent, which we believe is the geographic coverage figure needed to cover all the places our customers go, we’re not going to stop.
“We still have many more square miles to cover but we are making great progress on the network expansion journey. Our coverage was 50 per cent 18 months ago but now it is up to 80 per cent, which has covered tens of thousands of square miles additional coverage by our network team in that time.
“We continue to upgrade new sites and are rolling out new ones. We’re winning more awards, such as from RootMetrics, which named us as best network for the seventh consecutive time.”
However, it hasn’t been plain sailing for EE, and their competitors, when it comes to achieving the 90 per cent 4G coverage target this year.
Last month, Mobile News spoke to all four UK mobile operators, which warned that changes on mast deployment have not been good enough and more needs to be done to improve coverage.
Their remarks came more than two years after a landmark deal with the coalition government was signed to eliminate ‘not spots’ by boosting national coverage from 69 per cent. A deadline of 2017 was set, with operators agreeing at the time that mast numbers must rise from 27,500 to 40,000 to achieve this.
They also claimed this could not be achieved unless major changes were made to the Electronics Communications Code (ECC), which sets planning permission and costs for mast rollout. It was agreed the ECC caused delays and imposed unnecessary cost restrictions.
According to research from Analysys Mason by the government, the annual land rental cost is £5,500, mast construction £150,000, with annual maintenance and insurance costs of £1,500. Site negotiations for tower upgrades or renewals can take up to 18 months to settle.
Legal fees for settling those disputes range from £2,500 to £5,000. The time taken to upgrade masts can increase from 30 days to 108 days in circumstances where the lease requires renewing.
The government did make a number of changes to planning laws in England last year, such as enabling operators easier access to mast sites and increasing the height of a structure by 15 metres to enhance mobile coverage. However, changes have yet to be made to planning laws in Scotland or Wales.
Frustrations
Allera is clearly irked and frustrated at the delays in changes required within the ECC, but despite these challenges, is still confident EE will reach its 90 per cent 4G geographical coverage target before the end of this year.
“We’re on track to hit a 90 per cent geographic coverage figure, and that will be 4G whereas the obligation is for 2G,” he says. “That is despite the delays in the changes required for the ECC.
“We’re optimistic the reformed code will make things easier but there are many elements of this that have yet to be implemented.
“It is much harder than it should be to bring new coverage to new places. We’re rolling out nearly 500 new sites in the UK, we’re finding this to be a really hard thing to do [with] planning and landlord permission, ‘ransom’ rents and all of the inconsistencies between different industries etc. Much work needs to be done and in a quick and timely fashion.
“We have around 18,500 masts present in the UK. We still have to cover the country with 4G and we are working on achieving that.”
Clear on coverage
Allera’s head scratching with networks and the coverage they provide doesn’t stop there, and this time he vents his frustration at his rival mobile operators.
Last November, EE called for them all to get ‘Clear on Coverage’ and deliver clearer information about where customers can expect to receive a mobile signal.
Allera pledged to report all coverage in geographical terms from January, delivering on a call he made in April 2016 for improved reporting on coverage and experience.
He wrote an open letter to all three mobile operator CEOs – Mark Evans (O2), Nick Jeffery (Vodafone) and Dave Dyson (Three) – and asked Ofcom for support in driving the whole mobile industry to get ‘Clear on Coverage’.
As part of this, EE has stopped using population coverage measurements in isolation when communicating with customers, and is publishing updates on geographic coverage and data speed by county and by major roads.
It is also working with Ofcom to provide consumer advice on the role of devices in network experience and meeting with the regulator and operator CEOs to agree next steps.
However, Allera claims that while EE has followed through with its end of the deal, his rivals have yet to show any response in doing so themselves.
“We have changed all of our metrics to ensure that geographic coverage is now the most important metric. We don’t talk about population coverage in isolation anymore and that has been a very positive change.
“Customers like what we are doing and we are certainly seeing a good response from them to the campaign. We are also engaged in good dialogue with Ofcom around how the industry can be clearer on coverage – it is a very important topic for us all.
“However, we are yet to see the other operators come to the party on that – the whole industry should be doing that. I’d like to see them respond to the challenges that are being thrown down. It would be a positive thing for the industry to do this together.
Spectrum disputes
Allera appears happy with the progress EE is making under his leadership over the past year-and-a-half, but is acutely aware that more hard work is required to overcome potential hurdles the mobile operator may encounter.
The integration with BT continues at pace, whether that be staff, systems, or IT infrastructure, as it strives to create a converged network of mobile and fixed line.
An announcement from Ofcom over an upcoming spectrum auction is also imminent, with O2 and Three accusing both EE and Vodafone of sitting on unused spectrum, claiming the UK has the most imbalanced spectrum distribution of any developed country and this is wrecking competition in the UK mobile market and could force prices to rise.
EE currently holds 45 per cent of the available spectrum, followed by Vodafone (29 per cent), O2 (15 per cent) and Three (12 per cent). Three has called on Ofcom to impose a 30 per cent cap on the airwaves held by them, with O2 rising this to 35 per cent.
BT Consumer CEO John Petter entered a war of words with Three and O2 in April after claiming these calls were “not for the consumer’s benefit.
He also slammed Three’s ‘Make the Air Fair’ campaign and claimed it was “expecting to get spectrum on the cheap”.
However, despite a number of challenges looming, Allera seems relaxed about it all, preferring to focus more on the integration between BT and EE.
“There is lots of hard work going on from the EE team,” he says. “The integration is going well and across the holy trinity of service, network and the customer our people are delivering good results.”