Kelly drives for growth at KN Circet
Donagh Kelly is seeking global growth at KN Circet, driving as hard in business as he does in his rally car, writes Fearghal O’Connor
KN Networks founder Donagh Kelly roared at 130mph down a country lane at the Fastnet Rally when a fibre-optic cable on a telephone pole in the hedge caught his eye.
It was his signal to take a left-hand corner up ahead on his way to yet another motor rally victory.
“I’m the only rally driver in Ireland that uses poles as markers in my pace notes,” he says.
Kelly, who in 2015 became only the third driver to win both the off-road and tarmac Irish national championships, has also built a firm whose vans and engineers are a ubiquitous presence around the country as broadband has proliferated.
You may have ordered broadband or TV from Eir, Sky or Vodafone but there is every chance the engineer who installed it was from KN Circet, as Kelly’s company is now known since French company Circet bought it for €150m in 2018.
With KN’s own revenues set to hit as much as €370m this year, the merged group, of which Kelly is now deputy CEO, has turnover of €1.3bn. Most of Kelly’s original KN backers exited with a smile when Circet arrived. But the Co Donegal man was not tempted to depart the business for a life of unencumbered rally driving.
“No, because, for me, there’s too much unfinished business. I love what I do and I owe the people I’ve worked with for 20 years more than just taking a cheque and walking out on them.”
KN Circet is actively seeking expansion, in Ireland through the National Broadband Plan (NBP) and in the UK, France, Germany and further afield.
“Apart from KN’s Irish and British business I’m responsible for Germany and I’m off to the US again next week where we are looking at businesses. We’re also looking at businesses in Canada.”
Most recently, KN completed fibre connections to 1.4 million Irish homes for Eir and has just announced it is creating 600 new jobs here.
“We’re passionate about what we do and certainly when I drive the highways and byways of Ireland I’m a bit of a buff looking up at the poles and I know we’ve built them. There’s a great sense of pride in that, knowing that it’s a bit like the electrification of Ireland. I know that we’re the guys bringing fibre to the rural community.”
As part of the consortium that is on the cusp of signing a contract for the NBP, Kelly is confident a deal would see KN create a further 700 jobs for work it hopes to win on the project. Like the recent Eir rollout, KN would provide a full turnkey service to the consortium — surveying, designing, building and maintaining the new network, largely from its growing Letterkenny office.
“We hope to announce in the next couple of weeks that we’ll invest in a new facility there. Letterkenny now caters for the UK as well, and in time can be a European hub for the entire business.”
Kelly sees NBP as a social inclusion project, akin to rural electrification in the 1940s.
“I don’t know where the business case was for that either. But it had to happen. In the UK we are building rural networks all through Scotland, the Highlands and Islands, Cornwall, Devon, Somerset, Wales. These are all state funded projects. The same in France and Germany. There really is no business case for an operator to build rural networks so these projects all have to be funded in some fashion. They are social and community projects as opposed to just building networks. We can’t have part of our community isolated due to lack of connectivity. The future is going to be a much more connected world than today — and certainly compared to 20 years ago — with big drivers such as the internet of things, autonomous vehicles, e-health care and elderly care.”
Kelly does, of course, have serious skin in the broadband game. But, having grown up just outside Donegal town, he also instinctively understands the importance – and sometimes absence – of local opportunity for people in rural Ireland.
His mother was a school teacher and his father a builder, both strong advocates of the benefits of education. Kelly left Co Donegal to study quantity surveying in DIT Bolton Street. His first job saw him working on a small cable TV network in Scotland for an Irish contractor.
Back home, an opportunity came up to buy road-laying equipment from a firm in receivership but his employer declined. Kelly told a friend how frustrated he was by the missed opportunity, “Why don’t you buy it yourself ?” answered the friend.
“If I’d a hundred quid to my name that was about it. I was earning £50 a day. But he said to me if I could get finance he’d give me the €2,500 deposit I needed. I got the finance and we kept it running as a sideline business.”
It was the humble beginning of what would come later. In the meantime, Kelly’s day job had been bought out by an American firm — just in time for it to get hammered by the dotcom crash. Kelly led a management buyout, consolidating the firm back to Ireland with revenues of €10m.
But then Kelly had a serious crash of his own. He drove his rally car straight into a tree at 80mph, narrowly avoiding death but breaking his back in several places. “I remember losing control and then waking up but not hitting the tree,” he says.
He was out of work for four months but was straight back behind the wheel once he recovered. He has been rallying — often winning — ever since.
“Getting back in the car never cost me a thought. You don’t think about it. It’s selfish in one sense but I just don’t fear it. I fly helicopters too. I love the freedom of getting from A to B quickly. I’m an adrenaline junkie: flying, motor sports, water sports, skiing. Anything that has speed.”
“Driving on a country lane at 130mph can be pretty exhilarating. We’re still competing at the top of the sport but these young guys coming behind me in their 20s have no fear. My son drives now as well. It’s a passion I’ve had since I saw my first rally aged seven.”
After recovering from the crash and with the digital age gathering pace, KN was also beginning to go at full speed. Companies such as BT and Eircom began outsourcing engineering needed to build high-speed networks and KN thrived. The recession did put a major dampener on Kelly’s forward momentum by 2010. “We were losing big, big chunks of money every month. There were redundancies and pay cuts. Austerity was brutal. But we’d been prudent with no big salaries or dividends. Our reserves got us through,” he said.
To get things moving again, Kelly took a contract in Sierra Leone to build a network for a mining firm — “That was pretty daunting. West Africa can be a hostile physical environment, the infrastructure, the facilities, risk to health. It was a little bit unnerving at times but taught us we are world class in what we do and that we could stand shoulder to shoulder if not above everybody else.”
Caribbean work followed and Irish growth returned with demand for better broadband. “We reset the bar every year higher to keep energy in the business so nobody gets tired, nobody gets lazy. We run in this business. If you stroll you get left behind. It’s a punchy, pacy business and it doesn’t suit a lot of people. But that’s part of our secret. People would say to me over the years, surely you must be happy now that you are at a hundred million? No, we want more. And the wanting more isn’t about greed, it’s about progression,” he says.
So in early 2018, Kelly was looking to shake things up again. He had gone to the market to raise debt for an acquisition spree.
It was then his phone pinged with a LinkedIn message that changed everything. KN’s progress had not gone unnoticed.
“It was a message from a French guy I didn’t know saying he had done a deal with Circet, who I also did not know, telling me they had identified KN as a market leader. I get lots of notes on LinkedIn and I tend to disregard most of them but this one caught my eye so I sent it to our advisers in case it was something.”
The advisers called right back. “You need to take this seriously Donagh,” they said.
Like KN, Circet had ridden the wave of network subcontracting and grown to a €900m giant in its home French market over the previous decade.
Kelly flew to London and met Circet CEO Philippe Lamazou.
“We had a pint and a steak pie and we talked about the industry. There was an immediate connection. They are very driven individuals who share a lot of the same traits. We work hard and like a bit of fun as well. They know how to have a bit of a party but we both like to keep the nonsense out of the business. We’re all workers.
We all effectively grew up on the tools. We don’t like hierarchy or the corporate stuff. We like to keep it real and we all do a day’s work every day.”
Despite the chemistry — not to mention the reported €150m price tag on the deal — it still was not an easy decision for Kelly.
“I had to change my mindset. I was getting well supported by the Irish banks to do what I wanted to do. It was pretty difficult because this is my life as such. I set the business up when I was 23 and was being asked to effectively give it up and become part of something much, much bigger.”
But once he worked through the emotional side the logic of the deal was obvious. “From a business point of view it made perfect sense. Today we are the largest telecoms contractor in Europe, with revenues north of €1.3bn and growing, driven by demand for more and more and more bandwidth.”
The combined KN Circet, already the biggest telecoms contractor in Europe, can become the largest globally, he says.
“We’ve to expand into America and Canada and we have a plan for our expansion in Europe that will probably take a little bit more of an organic path but there will be some potential acquisitions.”
He has remaining rallying ambitions too. He has on a number of occasions led — but never won — his home Donegal International Rally.
“The thing you want most sometimes is the thing you can’t have. But time isn’t on my side — 49 next year and you don’t get faster with age.”
So which pursuit has brought more satisfaction, rallying or building a successful business?
“I don’t know,” he says, after an uncharacteristically long pause. “I think maybe that’s probably one of the flaws in my DNA. I possibly don’t take enough time to sit back and reflect and be proud of what I’ve done. Because I think we’re only starting. The day you think you’ve arrived is the day you left.”
He doesn’t want to be “the guy that loses the edge and is complacent about what has been achieved to date,” he says. “Yeah, there’s so much more to be done. We’re only kicking off for the next part of the journey.”