01 June 2018
Andrew Kwok wants HGC Global Communications, now under new ownership, to be a non-traditional telco that is committed to transformation, remembering that infrastructure is fundamental. He tells Alan Burkitt-Gray how he’s getting there
Andrew Kwok is seven months into a digital transformation
project at HGC Global Communications, where he is now CEO.
He’s hired a chief digital officer and
he’s recruiting a range of digitally-skilled
people, not to replace existing staff, he insists, but to add
to the range of talent available to the company as it pursues a
goal of transformation.
At last year’s ITW, he was president of the
international and carrier business at Hutchison
Telecommunications (Hong Kong), a unit that traded as Hutchison
Global Communications (HGC). It was owned by CK Hutchison, the
giant Hong Kong company that owns the Three telecoms brands
around the world.
But at the end of July CK Hutchison negotiated the sale of
HGC to a US private equity company, I Squared Capital, for the
equivalent of about $1.9 billion. Kwok was named CEO of the
operation, which also owns fixed-line and Wifi businesses in
Hong Kong. CK Hutchison would use the proceeds to invest in
mobile and the transaction was completed at the start of
What’s happened since? First, the name. It
couldn’t call itself Hutchison any more. "HGC
Global Communications is a pretty well-known brand –
well known to our customers and our business partners," he
The company reinforced its new identity with a number of
initiatives in Hong Kong, where it sponsored the Volvo Ocean
Race. "It was their first time in Hong Kong," says Kwok
proudly. The race, which started in Alicante in October, is due
to finish in the Netherlands at the end of June. "We have a lot
of support from our international carrier partners at the
race," says Kwok. "We had a concert for our consumer market and
that was well received."
The chief digital officer is Jacqueline Teo, who joined in
February. She has a background that includes KPMG, where she
was in its telecoms, media and entertainment practice, as well
as Hewlett-Packard and more recently Telstra International: Teo
was global head of digital customer enablement for two years
until the end of 2016. Kwok continues: "The second item is to
streamline our business. On the financial side we have defined
our investment philosophy." That includes a strategy that is
"critical to our long-term investment and returns", he
He has spent much time talking to HGC’s
business partners about "our new kind of thinking", he says.
"We can proudly say that we have not lost a single contract
with customers or partners around the world because of this
change. No contracts at all have been lost or terminated
because of this transaction. The market feedback is good."
There’s been "a lot of hard work", he adds, not
only naming the executive team and working on the new strategy
with the staff as well as developing HGC’s
partnership model "and especially our digital roadmap".
He’s pleased that "after all the things that
we’ve done in the past seven months",
he’s retained 99.6% of staff.
"We have been asking ourselves what does digital
transformation mean for a telco," he says. "We could talk about
this for an hour or more, but let’s keep it short.
Basically it is success or failure."
Why does he say that? "We believe that human beings are
stepping into the fourth industrial revolution, starting
several years ago." It’s a "very well-defined
fourth industrial revolution" that is already happening.
There are three parts to it: "One is globalisation, the
second is personalisation, and the third one is granularisation
– all the life styles have been cut into very
individual pieces. Everyone has their own choice."
Specifically, in our business, he says, they have choices "on
the way telecommunications are conducted, the services, the
expectations and so on".
How is HGC going to tackle this challenge? "Our main belief
is that one thing that will not change is the fundamental
infrastructure of the telecoms operators." Kwok is talking
about fixed local and international infrastructure, he says.
"The telco absolutely should not forget about its fundamental
role – otherwise all the thinking, all the wish lists,
everything will be in vain, because there is no fundamental
That gives Kwok some challenges. "We have put down four
different factors to allow operators like us to participate in
and contribute to digital transformation." He lists them: "New
technologies, the business model and new services; and the last
is a new type of organisation so that we can achieve it
The future, he adds, will rely heavily on machine learning
and artificial intelligence. "Having said that, we do not
forget our infrastructure, and we should not forget what kind
of new technologies we have to adopt as soon as possible so we
can ride on the digital transformation wave. That is something
that we are already doing or thinking."
He started his list of four different factors that are
needed in transformation with new technologies. These include
software-defined networks (SDN) and network functions
virtualisation (NFV), he says. They include an application
programming interface (API) hub, and a big data analysis
"Those are at the top of our priorities," says Kwok. "All
these items we have already started work on and we are planning
some of the fundamentals inside our network, inside our
services, inside our business model and very importantly inside
our organisation also."
The first step was the launch its software-defined wide area
network (SD WAN) services. "For the API hub we talked about,
our network is already interconnected with our partners,
service providers and customers on the API level."
Next? "Machine learning will come," he says. "For us that is
mainly in our network topology and also functionality." What
would that do? Kwok’s example is a network fault,
"machine learning will give us a lot of help to rectify some of
the failures in the network", he says, independent of rerouting
But a warning: "Having said that this is the future step, it
is absolutely not something we are deploying right now, I have
to stress. Machine learning is a hot topic, but this is a
concept. We are not at that stage yet. It is an idea brewing
inside the company." AI applications – for smart
cities, for example – "are the future and
we’re not at that stage yet".
Let’s turn to his ideas for a new business
model. "Our previous relationship with partners and carriers
around the world was very pure buyer-and-supplier kind of
relationship," he says. "More and more we see a success-based
kind of relationship."
What does that mean, precisely? The initial investment is
shared. "This may not be good news for the carrier," he says.
"If it fails I collect less from you. But we see this kind of
request coming from the market in return for more speedy and
solid cooperation." If the project is successful the carrier
will collect "more in the future" and the relationship is "more
and more sticky", he adds. Demand for this "is coming from the
market and you cannot go against market forces", he accepts.
"This is the market force. Embrace it." It matches
HGC’s investment philosophy and provides "a longer
term of return".
Whose sort of potential partners are seeking such
relationships? Both over-the-top (OTT) content companies "and
some of the carriers around the world", he says. "Corporate
customers very seldom ask for this – not to mention
the consumers. It is only for the brave ones, who can be very
open with a telco."
Kwok offers a warning, though. New services are important,
but "we still very much care about our bread and butter" of
today’s service mix. "If you forget about it you
will pay a very big price."
That doesn’t mean HGC shouldn’t go
for digital transformation, though. "One of our tasks is to add
in the digital ingredients on top of our existing services. We
should only fulfil reasonable requirements to put on top of our
services." For example, "to enhance our OSS and BSS", he says,
or to improve "the internal and external interfaces with our
customers to speed up communications, to standardise working
processes and to make the process speedy and also
Kwok adds: "This is an example of how we do not forget our
fundamental bread and butter." We can think out of the box and
create a lot of things, but those are not our mainstream
revenue. Digitisation has just started." And
that’s why he’s trying to change HGC.
"We have to present HGC as a telco committed to transformation.
This is long-term. It means a lot of hard work.
We’ll do something that is meaningful."
That’s why he’s hiring new people
into HGC. "Some think I am hiring new people to replace
existing staff. I’m absolutely not hiring to
replace people. I believe in continuity."
This means identifying people "who are more applicable to
the digital path" and building up "a new team". Existing staff
will look after key infrastructure, with "new talents and new
colleagues" to work on the digital strategy. They will come
from IT, from apps cos and OTTs. And he needs people –
more likely from the telco side – to act as
He sighs. It’s a challenge to persuade OTT
people to join the telecoms industry. "They say
we’re old guys. But when we explain they start to
adapt and are open to join our industry. We’re
already hiring some, and not only in Hong Kong. I have 18
different nationalities in my organisation. I find these people
in Europe and Asia." He’s in a hurry, but he is
taking the long view. "This industrial revolution will go on
for 10 or 20 years," he concludes.