HOT off the private jet from Madrid, Peter Erskine is at pains to assure me that this is not how it’s going to be from now on.
“Don't make the mistake of thinking I do this a lot,” he says, as we stride round Biggin Hill’s tiny airport, looking for somewhere to sit. Erskine, 55, tall and bulky with a down-to-earth manner, is embarrassed that I could take the venue as a lifestyle statement.
It has been two months since the O2 boss accepted a £17.7 billion bid for his company from the Spanish telecoms giant Telefonica. Now the reality of it all is beginning to sink in. The last week has been particularly hectic.
He released sparkling customer growth figures for O2 on Monday, then jetted off to Spain for his first board meeting at Telefonica. Then back to Kent for a two-day summit with Whitehall mandarins at Chevening House, the foreign secretary’s stately home, in Kent.
In between he has been shuttling Telefonica chairman Cesar Alierta round meetings at the Home Office, the Department of Trade and Industry and 10 Downing Street. Our meeting, round the corner from Chevening at the executive-jet aerodrome, is the less glamorous jam in the sandwich.
For Erskine, a boss whose chances of success were written off when he launched O2 five years ago, it is quite a change in fortunes. Given the gushing press he has received in recent months for turning round the company — now neck and neck with its old owner BT in the FTSE top 30 — and the clobbering his rival Arun Sarin is getting at Vodafone, he could be the first to gloat, but that’s not his style. He is quick to acknowledge that luck has played a part.
“Zero debate,” he nods, when I ask if he has been fortunate. Then he adds that O2’s success is also down to his team, not forgetting his two chairmen — first Sir David Varney, then Sir David Arculus — and particularly his finance director, David Finch.
“The City knows Finchy is one of the best, because of his touch and judgment.” Then there are O2’s marketing guys, and the comms department, O2’s ad agency, the sponsorship deals...
You can see why Erskine is a popular boss. He likes to spread it around, no fuss, no front. With his genial demeanour, Jimmy Greaves vowels and comfortingly old-fashioned moustache, he could be propping up the bar at an Essex golf club sounding forth on his favourite football team.
But behind the blunt amiability lies a passion for sales and a knack for team-building, drawn from experience at the blue-chip marketing experts Colgate Palmolive and Mars.
He also makes his own luck. His bold rebranding of the old Cellnet operation as O2 — derided at the time — followed by canny sponsorships of Arsenal and the England rugby World Cup team, now look like masterstrokes.
Next month he will have a new challenge, when O2 comes off the London Stock Exchange and is subsumed into Telefonica. Erskine will then have to convince his team that he can maintain their independence.
Under the terms of the deal thrashed out with Telefonica, O2 will have its own board, with Erskine as chairman and chief executive, and run all the Spanish company’s European operations outside Spain. The O2 boss, who does not speak Spanish, will also sit on the Telefonica board.
Some have been surprised that Erskine is staying — especially as he made an estimated £12m from the sale and could leave with plaudits ringing in his ears.
“I asked Telefonica if they wanted me to bugger off, and they said no,” he says. More important, he didn’t want to leave his people in the lurch. “Yeah, I’m a funny old fella, there is a lot of duty to the folks.”
His caution is understandable. Similar big deals pulled off by Vodafone (buying Mannesmann) and France Telecom (Orange) have brought problems. Will Telefonica buying O2 be any different? Erskine wrinkles his nose and runs through the benefits: more scale, cheaper calls and handsets, no territory overlaps so no job losses, great return for O2 shareholders. He also has a good feeling about Alierta — by reputation a taciturn deal-maker but a man of his word, says Erskine.
“I am not talking to Cesar like a boss — it is two people with mutual respect. Of course, in the end he is my boss, I am not naïve. But I think I am going to get the freedom I need.”
Those who know Erskine well say that if anyone can make the arrangement work, he can. “Peter’s not going to be prickly about authority, he doesn't have a large ego,” says Charles Dunstone, founder of Carphone Warehouse.
The mistake, adds Dunstone, is to think that Erskine’s geniality makes him a soft touch. “He’s loyal and supportive, but he also has a tough side that people don’'t see.”
That tough side has its roots in Erskine’s modest background — his grandfather was a docker, his dad worked all his life for Tate & Lyle. The O2 boss describes his upbringing in Woodford Green, Essex, the youngest of two sons, as working class and conservative. “It made me want to make enough money not to be short of it.”
He escaped to read psychology at Liverpool university and then cut his teeth selling Polyfilla to hardware stores for Polycell — a first job that gave him a love of marketing. Ambition drove him through Colgate Palmolive (selling anti-perspirant), and Mars (running vending machines), where he learnt American-style management.
“No e-mails or memos, you walked and talked. Lot of responsibility. Lot of pressure.” Later he joined BT, and toughened up his own approach, after an assessment said that he was inclined to fudge organisation.
Because he was too nice? “I know what I am not good at,” he nods, “I’m not a detail man. I get results because I pick good people. And I have a lot of common sense." Varney, his old chairman, backs that up: “Peter invests time and effort in choosing people, and he’s better at it than most.” Others say he is also an emotional rouser of his team and good at praising people, which many bosses forget to do.
He is certainly far less techie than you would expect from a telecoms chief. That has proved an advantage. Erskine’s varied career has included a stint in America for BT, and he has instilled O2 with the passionate values he likes: be bold, be trusted, be open and be clear. What he hates, he says, is unnecessary complexity — always prevalent in telecoms.
“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, then it’s too damn complicated’.”
Dunstone says it is hard to overstate the changes Erskine has made. “Cellnet was a mess, it never knew what it was doing. Now he has created an organisation that isn’t frightened to change things, and is nimble enough to be sensitive to the market and customers.”
Erskine’s decision to hold back on 3G has looked smart, and his handling of 02’s Irish and German subsidiaries adept. He promises that the structure of Telefonica — with independent arms handling Spain, Europe and Latin America — means it will avoid the size problems suffered by Vodafone. Nor can he resist a dig.
“I think it’s tough when you have so many businesses. Voda had a very able chap running the UK, and they whipped him off to run Japan. We were thrilled. We would have paid his airfare.”
O2’s change of status will mean more travel for Erskine too, but he says he will have time freed up, not having to deal with the City. Will he miss the profile he gets running a FTSE 100 company? “Nah,” he says. “The first few calls are nice but then your mum says you look fat in the pictures, or the kids are chuckling at you. I won’t miss it.”
He has four kids, nearly all grown up, who still take up a lot of his time outside work. To relax, he plays golf badly, and socialises quite a bit at his Henley home — “nothing posh, just a few friends round for a drink”. He also loves football, and was brought up an ardent Tottenham fan, yet happily signed off O2’s sponsorship of their great rivals Arsenal.
How could he do that? He rubs his moustache and grins. That was the question he got from an aghast Spurs director, but the logic was simple: Arsenal are a top team, it has been a terrific investment, and he is a great pragmatist.
But when you are at the top, surely the only way is down? He laughs. More than most, he knows that all too well right now. “Private jets,” he says, as we part, “it's not me, yunno?”
Vital statistics
Born: November 10, 1951
Marital status: married
School: Bancroft’s School, Woodford Green, Essex
University: Liverpool
First job: assistant brand manager, Polycell
Salary package: £660,000 plus bonus
Homes: Henley and Alicante
Car: black BMW 730
Favourite book: Da Vinci Code
Favourite music: Eric Clapton
Top film: As Good As It Gets
Favourite gadget: Blackberry
Last holiday: Muscat, Oman
Interests: friends, family, football
Peter Erskine's working day
THE O2 chief executive wakes at his Henley home at 5.30 most mornings. Peter Erskine drives himself to the office by 7am. “My escape valve when things get busy is always to start early.” He spends three days a week at O2’s offices in Slough and London, the other two on the road. He works out twice a week in a local gym. “Got myself a personal trainer two years ago. I pour into the office at 7.30am sweating like a pig. That’s great.”
If he is in the office, the day is full of meetings: reviewing the businesses, one-to-one meetings, catching up with suppliers, customers and bankers. Erskine usually has a snack lunch while working and will keep going until after 7pm. Twice a week he will take contacts to dinner. The River Cafe in west London and the Café du Marché in the City are favourite Erskine haunts.
Working space
PETER ERSKINE works from O2’s headquarters, a four-storey, modern block in the centre of Slough, near the rail station. He has a corner office on the top floor. “It was very interesting when we demerged from BT,” says Erskine. “Sir David Varney got an office overlooking Windsor Castle. I got one overlooking Tesco. So, fair distribution.”
His office is cluttered with business memorabilia and awards, and furnished with desk, meeting table and four armchairs. “I use the armchairs as much as possible for meetings as it discourages visitors from using slide presentations — they just talk, which is so much better.”
A giant Chinese mask decorates one wall, with a Bayern Munich scarf — “I went there recently, my German CEO is really into football” — draped over it. He has a new office at Telefonica’s HQ in Madrid. “You should see it. It’s so posh.”
