View from the top: Virgin territory for mobile chief

Virgin Mobile CEO Tom Alexander was saved by Sir Richard Branson from having to dress up as a mobile phone when the company launched, but as he now admits, such stunts led to success. Gidon Freeman reports

View from the top: Virgin territory for mobile chief

Virgin Mobile chief executive Tom Alexander has every right to feel a little pleased with himself, and judging by his tanned, relaxed look, one senses he is exercising that right. Earlier this summer he shepherded the business – founded five years ago as a joint venture between Virgin and T-Mobile – through a flotation that, when the balance sheet’s £300m of debt is added in, values the group at £800m. As Alexander pocketed his own share of that booty (double-figure millions), he will have considered it not bad for five years’ work.

As with many of Sir Richard Branson’s businesses, Virgin Mobile is a company built by PR. The firm launched with Branson and some scantily clad young women driving round London in a transparent truck shaped like a phone. Witty and sophisticated the images were not, but they were just racy enough to trigger a tabloid love affair that has endured to this day.

Alexander appreciates the debt he owes to marketing communications: ‘PR is immensely important to this business. Having people like [Virgin Group corporate affairs director] Will Whitehorn and [his Virgin Mobile counterpart] Steven Day around is crucial – they are larger-than-life PR men.

‘For Day in particular, being an ex-journalist gave us great insights into how the media think. It’s always been a case of making sure we have a story to tell. Another factor, of course, is that he is part of the key team. He is up to speed on everything we do and is at the table having his say when all the big decisions are being made.’

It is not just Alexander and Day who have driven the business from a standing start to over four million paying punters in that short spell. The firm also has a sales and marketing director, a brand director, a commercial director with a marcoms background, a customer relationship director with a marketing remit – and a chief executive who bleeds marketing nous.

This skewed allocation of senior roles within the company is, to say the least, at odds with how the City likes public companies to be run. Would the institutions not be happier with half a dozen finance experts running the shop?

Unique business Alexander’s explanation harks back to the ‘virtual’ nature of Virgin Mobile’s business. The company does not have the infrastructure that most mobile firms have: it buys airtime from (at the moment, and despite an acrimonious legal spat) T-Mobile, and then resells it to the public in jazzier, Virgin-esque ways.

‘You have to start by asking: what are we? We are basically a marketing and service-led organisation,’ Alexander says. ‘Our role is to attract and keep customers. We are not like many of our competitors in the mobile market – essentially engineering companies with a marketing front end – and the structure of the company is appropriate to the function.

‘I know some say the City would prefer us to be run by a team of accountants,’ he adds, ‘but we have always run a tight financial ship. Where creativity is concerned, the sky is the limit, but we’ve needed to run the business with great rigour.’

If he sounds certain on this point it is because the City respects value creation above all else, and it is hard to argue with someone who magicked close to a billion pounds out of the air in record time. But what the media value above all, of course, is openness and transparency – and it is here that Alexander came a little unstuck during the IPO process in July.

A contract accompanying the company’s draft listings particulars required journalists in receipt of the document to agree not to publish it – a move that enraged respected City editors.

‘We learnt a lot from that issue and how our plans were handled by the media,’ says Alexander. ‘The IPO was a success, but dealing with the press is always tough and the UK press in particular will always look at the negative aspects of a situation. That surprised me.’

Although he says the IPO was a success, the issue price was cut at the last moment (to 200p), as was the amount of the business sold off (a quarter), trimming the amount Virgin managed to raise to £125m.

This process seemed like a game of bluff with institutions that seemed to highlight the recent inexperience of the entire Virgin Group in dealing with the capital markets.

‘It was the first time Branson had been back to the London stock market for many years and it was important that it was a success,’ Alexander says. ‘The message we sent was important – that Virgin could create viable businesses that the markets would want to invest in.’

Despite this setback, Alexander remains upbeat about the company’s prospects in the public markets: ‘We always saw it as part of the blueprint of Virgin Mobile that we would float it at some point. Running a FTSE 100 company is a milestone [the firm is about halfway there, in the 250], but part of the challenge is to run a large listed business that delivers results and performs without the stuffiness.

‘There is too much dogma and bureaucracy in quoted companies – we built this firm on a mixture of fun and common sense and to keep it running successfully like that is the challenge.’ This goes some of the way to explain what motivates Alexander, given that he clearly has no real financial need to work again. But the true explanation is a sort of evangelical zeal that one sees often in own-er-managers and only rarely in public company CEOs.

Definition of a brand

‘At the heart of Virgin Mobile is a passion. There is a can-do attitude from the customer centre to the board,’ Alexander says. ‘Because the company has been successful, it has been enjoyable. There is still lots of growth in the UK, but replicating our success in other markets is also

on the cards. As for where exactly, I think that now we are public, I will have to tell the City first.’

Wherever it is that Virgin Mobile heads, it will do so in part on the skills of the team Alexander has established, and in part on the strength of Branson’s name. It is a deficit that Alexander is realistic enough to concede: ‘Branson is a brand in his own right.’ He adds: ‘According to the public, he spends his time running every Virgin business in a very hands-on way. That’s great because they like him, and it also works internally because his attitude rubs off on other people. He was very useful at conveying that image. He was also very useful in that I didn’t have to do all that stuff like dressing up as a mobile phone – and personally I can’t think of anything worse.’

The words Alexander associates with the company he built are the same as any CEO would choose to describe a business with a record of success in winning young hearts and wallets. ‘Fun, exciting, great value, delightful service and honest – these are our core values,’ he enthuses.

But there is also a peculiarly Virgin element to his wish list of word associations: ‘All Virgin businesses are similar in one regard: they try to leave you with a smile on your face.’

Running Virgin Mobile has certainly left Alexander with a smile on his face.

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