Carl Grivner, Pacnet: Reaching for the skies
Pacnet's troubles are now far behind them. In the space of a year, CEO Carl Grivner has given the company a bold new sense of direction. Alex Hawkes discovers how.
On May 23 2012, the longstanding CEO of Pacnet, Bill Barney, left his position with immediate effect. His departure shocked the industry. Only a week prior to this news, Barney, a popular figure in the carrier community, had delivered a keynote address at International Telecoms Week (ITW) 2012.
In the background to Barney's surprise exit, Pacnet became the subject of intense takeover speculation, with Indonesian operator PT Telekom submitting a bid thought to be in the region of $1 billion in May 2012. By late June, however, PT Telekom had walked away from the deal, reportedly stating it did not bring "added value" to the company.
Meanwhile, weak operating performances in the first half of the year had prompted Moody's Investors Service to downgrade the company's bond ratings from B1 to B2.
A huge challenge lay ahead for the incoming CEO. Enter Carl Grivner.
Grivner arrived at Pacnet in mid-July 2012 with a powerful reputation for delivering results. In his previous role as CEO at XO Communications, he had helped grow revenues by over 50% to $1.5 billion, through the implementation of an ambitious broadband and data IP strategy, turning the company from a local exchange into a national carrier.
He also brought with him a wealth of experience in the wider global telecoms marketplace, from his time with the likes of Worldport Communications, Cable & Wireless plc (Western Hemisphere) and Advanced Fibre Communications.
Grivner's most immediate and pressing task was to reassure employees and customers alike about the future direction of the firm.
"Early on, putting the stake in the ground that we are not for sale was very critical. Because when you are dealing with carriers and very large enterprise customers, they really need to know where you are going to be two years or so from now. It is hard to market a large deal when you have that degree of uncertainty," said Grivner.
Sending a clear message to the market
As with any CEO overseeing a major transformational period at a company, Grivner had to ensure that his staff had a clear understanding of the new direction for the business. As with all good business plans, his main focus related to identifying new strategies for accelerating growth and profitability.
Pacnet's "bread and butter", as Grivner likes to call it, is the considerable subsea infrastructure that the company first built its name on, which took some 12 years to create and which now carries an asset valuation of around $4 billion.
The cornerstone of the company's business most famously came from the operational merger and rebranding of Asia Netcom and Pacific Internet in January 2008, which saw the integration of the EAC and C2C cable systems to form a 36,800km network linking Hong Kong, China, South Korea, Japan, Taiwan, the Philippines and Singapore.
Various upgrades and expansions have since given the company a near unrivalled footprint in the region. Operating such an extensive and costly piece of infrastructure, however, requires meticulous planning. Grivner confronted this challenge with his typical blend of business nous and gusto.
"It was a lot of fun when we sat down and looked at what we needed to do to the network," he reflects. "We decided we needed to upgrade the network and selected a few key vendors to upgrade it to the latest and greatest 100G technology."
At the same time as pursuing additional bandwidth and capacity, Grivner began orchestrating an aggressive roll-out of Pacnet's data centre services across Asia-Pacific, a side of the business he describes as its "shiny new toy".
"The people of Pacnet have done a great job in continuing to grow through that difficult period of transformation, adjusting and getting it refocused on the new data centre side of the business, while not losing sight on the bandwidth business as well," says Grivner.
A year into the job...
Flash forward a year and Grivner's strategy has started to spring to life, much quicker than even he could have expected.
The company has been a constant presence on Capacity's news homepage, launching data centres in Chongqing in China and Sydney in Australia, as well as revealing further plans to establish a number of other facilities in China and Singapore.
In January, it also made public its intentions to upgrade to 100G, and its subsea cables and back office systems are in the process of being fully upgraded.
"It's going very well," says Grivner of the company's progress over the last year. "From a financial perspective, we are ahead of our targets in many areas. More importantly, if you look at the data centres we have brought online or are bringing online, we are experiencing success in the market there as well."
He supports this by citing several confidential "big names" that the company has acquired as new data centre customers, which include a financial institute for the company's Hong Kong data centre and a large London-based law firm.
He is, however, also acutely aware that the region's data centre market remains in a state of infancy.
"It's still an early market. There are a few brands in the market, but it's a big territory and there is a great deal of ocean in between the major data centre points," he says.
"The challenge is establishing data centres as close to those markets as possible. The dynamics are fragmented and the industry is cautious about how to go about building infrastructure, and where to take the next steps."
Having moved to Singapore from his native US when he first assumed the role last year, Grivner may be relatively new to Asian telecoms. But he has quickly gathered an understanding and deep passion for the market.
"The first and foremost thing is that there is a lot of growth. There are over a billion internet users, and it is estimated that there are more mobile devices per household in Asia than anywhere else in the world," says Grivner.
"That explosion is leading to more demand in terms of bandwidth and content, and getting that content as near to the user as possible. Asia is the hot place to be, and it will be for the foreseeable future. There are lots of gems being discovered in terms of markets to be in."
Grivner says he has enjoyed every second of his move to Singapore, describing the country as one of the easiest places to adapt to. "It's a remarkable place in terms of organisations," he adds.
He has, however, had to adapt his vision of the business to match the idiosyncrasies of each particular market in the region.
"You have to take that broad plan and execute it on the particular dynamics of each market at the same time. And that' one of the things that you learn coming directly from the USA. Everyone there has a very homogenous view of that market – here every market is very different," he says.
Fundamental to this is local expertise.
"Data centres are essentially bricks and mortar, with technology integrated in. But the people side cannot be underestimated. There are a lot of differences between the countries, and part of the glue we bring is the people," Grivner says.
The sky is the limit
Making bold moves in order to follow customer demand has underpinned the success Grivner has enjoyed throughout his career. At XO Communications, Grivner felt the business originally lacked a strong enough focus on wholesale and set about changing that.
"Wholesale went on to become an important part of the business, and achieved the highest growth rates at the same time," he says.
He describes wholesale as becoming "part of your DNA". It changes the way to think about business, he says, as essentially "you buy, sell and compete with your customers".
Also during his time at XO Communications, he orchestrated the company's move to IP, taking the bold move to migrate away from its legacy TDM networks.
"There were huge amounts of benefits as a result of doing that," he reflects. "Every now and then you have to take that leap of faith, and move away from that technology that you got you there for the last 25 years, and move in a new direction. And if you don't, then you're going to be behind the curve of your customers, which are changing fast."
That philosophy is reflected today in Pacnet's early move to 100G.
A keen flyer, Grivner holds a pilot's licence with an instrument rating in the USA and has been taking to the skies for some 25 years. Parallels can be drawn between his career in wholesale telecoms and his love of aviation.
"Communication is critical when flying. All sorts of things can change along the way when you're trying to get from point A to point B. Like with business, you need to adapt to the conditions and be a strong communicator with people," he says.