Peter Erskine

From hardworking east London origins, Erskine cut his commercial teeth in sales and marketing before heading to BT, where he masterminded the recasting of struggling Cellnet into soaring O2, now the UK's leading mobile operator. Then he sold it to Telefónica for £17.7bn - and he's still the boss.

by Andrew Davidson
Last Updated: 31 Aug 2010

There is an ease to Peter Erskine that belies his status, a blokishness that sometimes catches you off-guard. 'Sorry I'm late,' he says, moustache bristling. 'Fancy a tea? Water?' He helps himself from the table in the anodyne office at the City of London block where I've waited, then listens while his communications chief explains the schedule: chat with me, then photoshoot for the MT spread.

Erksine starts to look a little grumpy. 'But I want to make sure we get enough time to chat,' he says, almost as if it wasn't his fault he was a quarter of an hour late. 'Photos... ' He makes a face. He doesn't like having his picture taken. But the photo is important, we tell him. 'Oh, all right then,' he agrees, suddenly jovial again.

'So, what do you want to know?' he says, lowering himself into a comfy armchair, clutching a tumbler of Highland Spring. Behind the weariness, there's a twinkle in the eye. He could be the favourite uncle at Christmas, cradling a whisky.

That unpretentious simplicity has puzzled many as Erskine, now 55, has progressed his career - starting at Polycell, moving to Colegate Palmolive, then Mars, Unitel, British Telecom and, finally, heading O2, the mobile telephone service provider that he created out of the old BT Cellnet.

He is now one of the most successful bosses in the telecoms industry - he remains head of O2, despite selling it to Spanish giant Telefónica for £17.7 billion just over a year ago, and has recently pushed the brand into number one slot in Britain, ahead of Vodafone. For the future, there are plans for O2 to go into broadband and internet-delivered TV in Europe. Contrast this with the fate of Orange, whose acquisition by France Telecom in 2000 seems to have sucked both cash and dynamism from the firm.

Yet to meet, Erskine is so unlike most multinational bosses - without their impatience and flunkies - that he could still be popping round to sell you some of his Polycell products. At O2, he has very cleverly taken the tech out of a consumer technology business, and others now go to him for tips. And because he spends a lot of time telling you it's all about luck and that he's no great brain, you have to remind yourself of the level at which he operates.

The last time we met he had just jumped off a private jet at Biggin Hill, back from his first Telefónica board meeting in Madrid. He was about to pop into a government conference at Chevening House, the foreign secretary's stately home base. Erskine had been at pains to point out that he doesn't usually do that kind of lifestyle. 'Private jets, it's not me, y'know,' he mumbled. With his rumpled bulk, toothbrush moustache and Essex vowels, there is a touch of the old Tottenham Hotspur striker Jimmy Greaves about him - appropriately, perhaps, as Erskine is a lifelong Spurs fan. What you forget is that, beneath it all, he must be ruthlessly smart. This is a man who put his company logo on the shirts of Tottenham's deadly rivals Arsenal, during their recent glory years. No room for sentiment with Erskine, you suspect.

So, one year in, how are the Spanish treating him? 'Well, it's very arms-length, very grown-up, y'know?' he says, settling into his chair. 'It doesn't mean we have stiff-armed them, it doesn't mean they aren't our owner and shareholder, but there's a good degree of mutual respect - they trust us. They have people who come in to look at our results once a month. But they trust me to share the big issues and I have no debate that Cesar Alierta [chairman of Telefónica] has the last call. All in all, it's gone incredibly well.'

Erskine now runs businesses in Britain, Ireland, Germany and the Czech Republic for Telefónica under the O2 brand. Despite speculation that he would swiftly leave O2, he's still there, his finance director David Finch is still there, and he's not flooded with Spaniards. His business does its own thing. He sits on the Telefónica board, despite his lack of Spanish (he has a translator). So far, it has been a very courteous takeover, by all accounts.

Erskine says they have worked hard at it. 'We've put together an O2 board of my executives and Cesar and two of his top colleagues. I want to make sure that they get full exposure to what goes on and get my version and my team's version, rather than minions down the line who choose to be mischievous.

'It also helps that we were not a broken business. It's been hard but our management feels pretty empowered; the job of my individual country CEOs hasn't changed at all. And, you know, the Spanish are seriously high performers. That's not just me being sycophantic - their business is performing well against all the benchmarks of other operators, their revenues and profits in 2006 grew 40%. Even if you pull out the stuff they bought, they are still growing 10% like-for-like. That puts them well ahead of all the major players in Europe.

'So I have been able to say to the O2 folks: one, we have been treated very sensitively; two, we are learning stuff from them and they are learning stuff from us; three, we have joined a pretty high-class gang. It is not as if we have joined a load of bureaucrats who are ex-government. They are not.'

Erskine is one of the business world's great salespeople, so you might be tempted to take anything he tells you as a pitch. He likes his lists and usually numbers them - conversation will frequently switch to him explicating the best reasons for doing something with argument one, argument two and argument three, in the right order. And he knows his audience. His launch and marketing of O2, the former Cellnet service, was seen as airy-fairy fluffiness at first. Now it is seen as textbook stuff - burying the technology, emphasising the ease of use.

O2's sponsorship hit rate has also been extraordinary: Arsenal before it moved to the Emirates stadium; England rugby when it won the World Cup; last year's winning European Ryder Cup team. He's so confident that he has now taken on London's Millennium Dome, soon to be re-opened as an entertainment complex and renamed the O2 venue. Some say the Dome is jinxed, and the press are still sceptical. Is he just showing off now?

He looks defensive and you can see him mentally prepare his lists of arguments. 'We have done the Dome for a specific set of reasons,' he says. 'It's good for customers and for us in terms of exclusivity, because we have learnt with sponsorship that it's important to give consumers the benefit. So at Twickenham, when England play, there's an enormous marquee and you just have to show your phone to prove you are a customer, and you can go in. Now, imagine a rock and sports venue where our consumers can get the lion's share of tickets.'

But wasn't he wary of all the Dome's bad press? 'Yes, at the beginning, but the stigma seems to have gone. Winning the (2012) Olympics helped, but the proof will be when the venue opens this summer.'

O2 is efficient in using a sponsorship for more than just the benefit of the nobs in the corporate boxes. It's linked to everything from downloads and priority tickets to pies and pints in the Twickenham marquee. That's why Erskine wins awards for marketing.

'D'you know,' he says, 'when we launched the Czech business in September under the O2 brand, we used the same campaign we had in 2002, and we managed to stretch it to broadband and internet television? It's a brand that's worried about you as a customer, it's edgy, it doesn't talk technology, it talks about what it can do to make your life better.

'The point is, most people - other than the 10% who are techies - are not interested in the technology, they just want to know: what does it do for me? Is it simple to use? Will it always work in a friendly way?'

Those who have dealt with Erksine say he applies much the same principles to his own business style, presenting a side of himself that is easy to use - his gregariousness, his ordinariness, his plain-speaking common sense - and leaving the sharper edges to blur in the shadows. Charles Dunstone, founder of Carphone Warehouse and an old sparring partner of Erskine's, told me last year that the mistake people make with the O2 boss is to think that he is a soft touch. 'He also has a tough side that people don't see.'

Carphone Warehouse felt both sides last year when O2's rival Vodafone withdrew its products and Erskine was immediately quoted offering support to the retail chain, but also hinting that he'd be negotiating tougher deals with Dunstone. You don't survive in the cut-throat mobile phone business without that.

Erskine's take is that he has consciously worked on being tougher. Before O2's launch, he was told in a BT assessment that he was happier 'to be nice to people rather than tough', which meant he was inclined to fudge organisation. 'I learnt to toughen up quite a bit,' he told a reporter later. 'That did mean two or three of the top team were asked to go.'

And anyway, success, he points out, is often dictated by what happens to others. He has been lucky in that his bigger rival Vodafone has run into problems. Does he have views on why? 'I have lots of views but I keep them to myself,' he says firmly.

Oh, come on, he brought it up. He gives a grudging nod. 'We still keep it simple. Yes, I have a Czech business, but I don't have to worry about a Japanese business, or a US investment. I already feel I have got plenty of scale - that means I can get minutes of use in roaming at low cost, and equipment and content providers want to do deals with us. Beyond that, I see no burning ambition, no rush.'

Meaning O2 won't try to plug gaps by buying businesses in France or Italy? Unlikely, he says. 'Telefónica in 2007 wants to consolidate what it has got.' Others, however, believe O2 must eventually try to fill in the gaps, although finding bargains now is hard.

Later Erskine tells me how much he admires the French mobile business Bouygues Telecom, owned by the French construction giant. Could that be an O2 target? 'No,' he says firmly, 'we are not going to buy it in the near future.'

Many are just surprised that Erskine hasn't taken the estimated £12 million he made on his O2 shares and gone off to find new challenges, but he says there is still a job to do blending O2 and Telefónica. No cultural friction yet?

He laughs. 'The main cultural difference is that they work very long hours in Spain - meetings start at 4.30pm, then go on till 9pm with dinner after. The lovely thing is they are friendly and relaxed people, but very professional.'

Which strikes a chord with Erskine, who has always been a hard worker with an easy touch. And that, he says, comes from his background, brought up on the edge of working-class London, between Stratford and Chigwell. 'My dad was Mr Conservative, worked all his life for Tate & Lyle. His only deviation was to fight in the last war for the RAF. His dad was a docker - out of work a lot, nine of them, including my old man, in a rented two-up, two-down.'

That was why his dad became so risk-averse. Conversely, it was why Erskine then jumped around in his career, always looking for something better, and more money. 'I had very modest roots, which made me want to get enough money not to be short of it, if that makes sense.'

He studied at Liverpool University, because it was as far away as he could get. 'Loads of fun... ' Then he joined Polycell from the milk round, and was put into selling. 'I can remember thinking: I don't fancy this.' But it turned out to be the making of him, especially dealing with sales rejection. 'I just really enjoyed it.'

He married at 23 - to a teacher he had met at university - and bought his first house. 'I had absolutely nothing, borrowed 100% from the council, my parents bought us a dining table and her parents bought us a settee. My mum loaned us a couple of hundred quid for the heating.' It was a start.

Then he climbed companies, always trying to improve his CV. At Mars, he supplied vending machines, 'not the glamorous bit', but was rotated round different functions. 'You learnt to hit your numbers, and you had to fight for all your revenue growth.' Then in 1990 a headhunter rang him and asked if he wanted to join Unitel, one of the new mobile phone companies, as sales chief. Not wanting to be Mr Conservative, he took the leap. Three years later BT came along, saw what he was doing and snapped him up, later sending him to America to help sort out a joint venture with MCI. He had quickly amassed the full tour of duty: small telecoms company, telecoms giant, overseas experience. Then he was asked to run Cellnet.

But his was not a straightforward appointment, and when BT, crippled by debt, bowed to pressure to demerge Cellnet, some on the board thought Erskine, with little public company experience, was the wrong person to front the float. That has driven him on ever since. 'Christopher Bland became chairman of BT and, to give him his due, he was deeply straight. He said: "We are going to back you to be CEO, but you are going to have an executive chairman and a finance director with plc experience - you are the meat in the sandwich."'

That chairman, Sir David Varney, became a close ally. 'As soon as we met I knew it was great,' says Erskine. 'David is deeply bright. I am more of a grinder and a pragmatist; I never thought: I am deeply intellectual. I get good results because I pick good people.'

Varney backs that up, citing Erskine's people skills as key. 'Peter invests time and effort in choosing people, and he's better at it than most.'

David Finch, formerly at Exel, Novar and Grand Metropolitan, was pulled in as the finance director. The team went on to engineer a much-needed overhaul of the company - 'Cellnet was a mess,' remembers Dunstone. 'It never knew what it was doing' - and win new admirers for it.

Erskine, as is his style, credits others with the knowhow. His own talents are, he claims, more about being flexible and opportunistic. 'I am not very good at detail, which is where the finance director is awesome. I have to duck and dive a bit. You can come up with a master strategy, but when it comes to implementation, you have got to move around a bit.'

So he put a good boss into O2's German subsidiary - a business that others told him to sell. But he did sell O2's Dutch subsidiary, because that bought him time. And he gradually built a team ethic that was about getting things done. 'We see a hill, we go take it. It's been fabulous.'

Most importantly, O2 has remained at a size where he felt as boss he could make an impact. 'I didn't tell you this, but when I came back from the US for BT, they asked me to run their business division for six months - it had 35,000 staff and contributed 40% of revenue. And I realised you couldn't make an impact. It was a grind. I asked to go to the cellular business. So could I get excited about what Ben Verwaayen does at BT? I don't think I could. I like results quickly.'

But what will Erskine do next? He says he's happy. But you get the impression he might listen to the right offer. Doesn't he miss being a FTSE star? 'Do I miss going round investor meeting after investor meeting? To be truthful, no, I do not.'

Has he been approached to replace Arun Sarin at Vodafone? There was some speculation... He puffs his cheeks. 'Oh, that's just press. It's irrelevant, I have not been asked, and I also think Arun's job is different to mine. It's a much broader portfolio, and I think it's more fun doing my job. That's why I do it.' And anyway, he wants to see how the market pans out from just where he is. 'There is likely to be consolidation but (the question of) how is going to be really hard. Will 3 carry on as it is? I don't know. Virgin has already consolidated, merging with NTL... '

Will O2 be following Virgin into offering 'fourplay' - mobile, fixed-line telephone, television channels and broadband?

He shakes his head. 'We are doing it market by market. So we have launched internet TV in the Czech Republic, where there's great demand, and we might launch in Germany. It's less likely in the UK, as it is a pretty penetrated market.'

Equally uncertain is whether O2 will keep its Airwave business, the emergency service network that it runs in Britain. That is 'under review' by Telefónica. What Erskine will confirm is that he wants O2 to concentrate on winning an even bigger share of revenue here. 'In the UK, although it's a mature market, we grew it by 14%-15% last year in revenue terms. That's well ahead of the pack. It's difficult with the price pressures to grow the average user revenues, but the indications are that data and 3G should give us an uplift... '

Then, as he's about to launch into some techie detail, we run out of time. Probably a good thing, as Erskine admits he prefers the bigger picture. 'I get guys trying to show me things with 22 charts but I say to them: if you can't describe it to me in conversation, it's too damn complicated.'

But we keep chatting as he walks to the photoshoot, and he sketches in his out-of-office life: lives in posh Henley-on-Thames, holiday home in Alicante, his kids grown up, plays bad golf, goes for long walks every weekend for exercise, occasionally gets to see Spurs play but the last time was at Reading in mid-November - they lost 3-1. 'It was my birthday, lovely afternoon, I was gutted, I almost cried. I think I might support Reading now, as they're my local club.'

Reaching the room allocated for the photoshoot, he becomes sombre again. Harry Borden chats animatedly to him as he puts him into poses. Erskine looks like a reluctant Labrador.

'Give me absence of thought,' says Borden, focusing his lens.

'Oh, that's easy,' says Erskine morosely, without moving a muscle. Everyone falls about laughing, thinking: 'what a nice guy'. Finally, Erskine smiles. Job done.

FOUR CHALLENGES FACING ERSKINE

1. To further improve O2's focus on customer service, especially in new areas such as broadband

2. Moving beyond mobile into a converged world with the development of new revenue streams - eg, mobile advertising and search - to make data services a reality

3. To ensure O2's growth continues in the UK and Germany while developing the business in the Czech Republic and Slovakia

4. Delivering the benefits of being part of the wider Telefónica group; to incentivise and retain the best people to work at O2

ERSKINE IN A MINUTE
1951: Born 10 November. Educated Bancrofts School, Woodford Green, Essex
and Liverpool University
1973: Joined Polycell as graduate trainee
1977: Brand manager at Colgate Palmolive
1980: Joined Mars in sales and marketing, later European vice president,
Mars Electronics
1990: Headhunted to sales and marketing vice president, Unitel, which
later became One2One
1993: Appointed director of BT Mobile
1995: Made president and CEO of BT's Concert joint venture with MCI
1998: Appointed managing director, BT Cellnet
2000: Made CEO, BT Wireless
2001: Appointed CEO of O2 on its launch
2005: Sold O2 to Telefónica, remaining CEO and becoming director on
Telefónica board.

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