Ac­tavo’s Malone is com­ing to Amer­ica

Ir­ish com­pany eyes TV mar­ket as a land of op­por­tu­nity State­side.

Irish Independent - Business Week - - FRONT PAGE -

IF the con­tro­ver­sial sale of Site­serv, four years ago, has cast a shadow over the busi­ness, no­body’s told TJ Malone. The com­pany has been re­named Ac­tavo, and Malone – who first joined the busi­ness more than two decades ago straight out of col­lege – heads up its largest divi­sion.

The 2012 sale – which in ef­fect was driven by the for­mer Anglo Ir­ish Bank as Site­serv’s main lender – has long been con­tro­ver­sial both be­cause of the scale of losses suf­fered by the then State-owned bank, and also be­cause the old share­hold­ers man­aged to pick up a pay­ment for see­ing the dis­tressed dis­posal through.

The deal, along with oth­ers where the for­mer Anglo took big losses, is sub­ject to an on­go­ing en­quiry.

The way Malone sees it though, it was a life-saver for the com­pany.

If it hadn’t hap­pened, he and thousands of col­leagues would have joined the hun­dreds of thousands of oth­ers from the con­struc­tion sec­tor who ended up on dole queues and emi­grant flights after the crash, he reck­ons.

“The jun­gle drums were beat­ing. Some very good clients were start­ing to ask ques­tions – and I’d have been the same in their shoes. It (the sale) was very timely, if it didn’t hap­pen, I’d say we were a mat­ter of weeks from Re­ceiver­ship,” he says.

The com­pany, weighed down by debts it couldn’t sup­port, had reached the end of its road when it was bought by De­nis O’Brien, he says.

“There were two and a half thou­sand peo­ple, in the end the credit in­sur­ance had been pulled, that’s a mas­sive thing in our in­dus­try, par­tic­u­larly for the guys in the UK, it’s mas­sive.”

Even be­fore that crunch point, the busi­ness had been adrift, ham­per­ing the plans of Malone, who, de­spite his rel­a­tive youth, is an in­dus­try vet­eran.

In per­son, he com­bines an en­tre­pre­neur­ial drive with fairly pol­ished ex­ec­u­tive pre­sen­ta­tion style – sprin­kling ref­er­ences to KPIs and per­for­mance metrics through our con­ver­sa­tion.

“You’d go to meet­ings with clients and as time wore on you were get­ting more and more ques­tions about it.

“You were putting ten­ders in for large work and the first thing you were asked for were your ac­counts, and there were ques­tions over the vi­a­bil­ity of the com­pany. Are you go­ing to be around?”

The change from pre-sale to post, was to­tal, he says. “It was like tak­ing the shack­les off us,” he said.

The for­mer Sierra, the part of the busi­ness run by Malone, has ex­panded from 320 em­ployee to 3,000 now.

Along with the rest of the group, Sierra has now been re­named as Ac­tavo’s Net­work and In-Home divi­sion.

Its growth in­cluded win­ning one of four con­tracts to in­stall me­ters for Ir­ish Wa­ter, a con­tract that man­aged to win Ac­tavo the ire of op­po­nents of the wa­ter charges.

Pre­sum­ably, op­po­si­tion to wa­ter me­ter­ing was part of the rea­son for the name change, I ask? Malone doesn’t agree. The Sierra name was dropped re­luc­tantly.

At a group level there was a need to sim­plify from eight brands to one – but se­ri­ous con­sid­er­a­tion was given to re­tain­ing Site­serv as the over­all brand, he says. Ul­ti­mately, the name, re­flect­ing the past fo­cus on con­struc­tion ser­vices, was seen as too lim­it­ing. Ac­tavo was seen as a bet­ter fit.

You could count the col­umn inches ded­i­cated to Ir­ish Wa­ter, Sierra and wa­ter me­ters in miles rather than inches, but Malone in­sists it was never a huge part of his busi­ness – “less than 1pc of our turnover”.

Surely then, he has cause to re­gret get­ting in­volved in what must have been a uniquely chal­leng­ing con­tract – in­stalling wa­ter me­ters in the eye of a mas­sive, and prob­a­bly uniquely bit­ter, po­lit­i­cal row. Malone de­murs. “Any con­tract to us is worth it. We had a con­tract we had to de­liver and we’ve de­liv­ered it,” he says, mat­ter of factly.

“Whilst ev­ery­one one else was writ­ing about it and talk­ing about it and de­lib­er­at­ing over it, we haven’t re­ally paid that much at­ten­tion bar do­ing the work and just get­ting on with it.”

The num­bers bear him out. Over the last three years the busi­ness, now headed by for­mer Dell ex­ec­u­tive Sean Cork­ery, has grown rev­enue from about €184m to what will be just un­der €420m by the end of 2015.

“By the end of 2016 we’re on course to grow to close to half a bil­lion euro,” he says.

That’s on the back of a mas­sive in­ter­na­tional ex­pan­sion – in the UK, the Caribbean and with a push now into North Amer­ica.

It’s a far cry from the days in early 2012, wait­ing for the axe to fall.

“I think while ev­ery­body else ap­pears to have been dis­tracted by what’s go­ing on on the ground here, we’ve moved on,” he says.

Once the talk turns to Ac­tavo’s cur­rent plans, Malone’s en­thu­si­asm starts to re­ally bub­ble over.

But it’s clear he’s a care­ful man­ager, eye­ing trends four and five years out and grad­u­ally ro­tat­ing the busi­ness to take ad­van­tage.

Dur­ing the crash here, that meant get­ting out of a lot of civil engi­neer­ing work – “the mar­ket just stopped” – and get­ting deep into ser­vic­ing the tele­coms and home en­ter­tain­ment mar­ket.

“We sat down and looked at the re­ces­sion land­scape and asked our­selves what was fu­ture proof, what was re­ces­sion proof ?”

The strat­egy they came up with was counter in­tu­itive – a big push into ca­ble TV and broad­band. The view was that with house­hold bud­gets smashed, stay­ing in would be the new go­ing out – mean­ing more, not fewer, peo­ple sign­ing up for tele­vi­sion pack­ages.

“Pay TV went from be­ing a luxury to a ne­ces­sity and we went hard after the tele­coms mar­ket. It was a risk but it worked out.”

Big con­tracts Ac­tavo has with the likes of Sky and Vir­gin Me­dia in Ire­land, and sim­i­lar play­ers in the UK, is one rea­son some of Malone’s thousands of staff may well have crossed your thresh­old this year.

It also does big vol­umes of work for Bord Gáis in­stalling and ser­vic­ing boil­ers.

The rea­son you didn’t no­tice is that Ac­tavo brands its staff and kit with clients’, rather than its own, livery.

It means fore­go­ing the good­will po­ten­tially gen­er­ated from mil­lions of house calls and site vis­its a year, but is a dif­fer­en­tia­tor for the busi­ness, putting the client’s need first to max­imise the cus­tomer ex­pe­ri­ence, he ex­plains.

It’s a sub­ject Malone is mes­sianic about, even build­ing a full scale fam­ily home in­side the com­pany’s train­ing ware­house, where staff sim­u­late site vis­its and run through the chal­lenges of be­ing in­side a real home.

To en­sure best prac­tice Ac­tavo works with groups rep­re­sent­ing blind and deaf peo­ple as well as those with dis­abil­i­ties. The stakes can be high. “If you are in the home of say a child with autism – if that child is used to watch­ing a pro­gramme at three in the af­ter­noon and some­how you knock that out of sync, that child can take weeks maybe to re­cover.

“We’ve got to recog­nise that and we’ve got to work around that, and we’ve got to be able to talk with the par­ents and fa­cil­i­tate that,” he ex­plains.

It’s the level of de­liv­ery that Malone says marks his busi­ness out from its ri­vals.

If TV was a good bet dur­ing the re­ces­sion, Malone’s big punts now are on smart me­ters which un­der EU rules must be rolled out for all gas and elec­tric­ity users – first in the UK and then Ire­land, within a mat­ter of years.

The num­bers are in­cred­i­ble – in Bri­tain in­stal­la­tion will have to hap­pen at a rate of quar­ter of a mil­lion homes a week to meet the Euro­pean dead­line.

Ac­tavo will be ready, Malone ex­plains, after gain­ing ex­per­tise by tak­ing on con­tracts to in­stall pre-pay me­ters for Elec­tric Ire­land PrePay Power, and in­vest­ing in costly ac­cred­i­ta­tion to qual­ify once ten­ders start to be awarded.

But his big­gest prize is the US. A huge con­tract to lay fi­bre to the home for De­nis O’Brien’s Dig­i­cel in the Caribbean, harder to win than I as­sume, Malone in­sists, has brought Ac­tavo within an hour of Mi­ami.

Ear­lier this year the com­pany bought US net­work de­sign firm AES, having col­lab­o­rated with the busi­ness on the Dig­i­cel con­tract.

The deal takes Ac­tavo fur­ther up the value added chain – it’s high end spe­cialised work, but Malone’s plan is to add it to the ex­ist­ing ca­pa­bil­i­ties to launch an end to end net­work de­sign and build ser­vice in North Amer­ica.

Fi­bre to the home is new, and new en­trants are shak­ing up the mar­ket. “When we started to re­ally re­search the mar­ket in the US it re­ally blew us open,” he says.

Like smart me­ters on this side of the At­lantic, fi­bre roll­out in the US is a given, Malone reck­ons.

“You have Net­flix, on-de­mand content, catch-up TV, all of these prod­ucts de­mand high speed net­works, the legacy cop­per net­works just can’t take it,” he says.

Op­er­a­tors who don’t put in new in­fra­struc­ture will be left be­hind. “There are 136 mil­lion homes in the US and 28 mil­lion have a fi­bre net­work run­ning by them, but that’s pro­jected to dou­ble in the next three years.”

The idea is to lever­age the busi­ness that has been built up in the Caribbean with AES’s in-de­mand de­sign ser­vices among op­er­a­tors.

“They need to de­sign it be­fore they can build it, so if we’re in the door from a de­sign point of view it brings us au­to­mat­i­cally in the door from a struc­tural and in­stal­la­tion per­spec­tive.”

If it comes off, break­ing the US mar­ket will be trans­for­ma­tive.

So much so, that I won­der whether it makes sense to for Malone’s Home and Net­work­ing divi­sion to re­main within a wider group – wouldn’t it be bet­ter as a stand-alone? Malone says “no”. He cites as an ex­am­ple the In­dus­trial Ser­vices divi­sion’s re­cent con­tract win in Kaza­khstan.

“It’s some­where we will look at now too. If one divi­sion goes in to a mar­ket they are putting a flag in the ground for the rest of us.”

‘By the end of 2016 we’re on course to grow to close to half a bil­lion euro,’ TJ Malone says about Ac­tavo’s rev­enue

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