Manx Telecom CFO, Danny Bakhshi, talks to Financial Director about how he is changing company culture to drive growth and why innovation is key to business success
For Danny Bakhshi, island life was just one of the perks of taking up the CFO role at Manx Telecom, the primary provider of broadband for the Isle of Man.
Bakhshi has spent his entire career working in the telecoms industry. Starting out at BT after he left university, he rose through the ranks over 17 years, to become senior vice president of finance of global solutions, before giving up corporate life for good – or so he thought.
Tempted back by a former colleague, he joined Vodafone to build their global enterprise business, a role that took him to Nairobi for two years as sales director.
Bakhshi learned the finance ropes from Tony Chanmugam, the former CFO of BT, who stepped down from the role in 2016. And it was finance that brought him to Manx Telecom.
“What I found with the other roles is that they were very narrow,” says Bakhshi. “Whereas finance gets you into everything.”
Being a small island company was something that attracted Bakhshi to Manx Telecom. A community company serving the Isle of Man and its citizens had a “nice appeal” and a “different ethos”. The fact that the company was listed on the AIM market added excitement to the offering.
While the company needs to meet investor expectations, as some portfolios claim 99% of the market share, finding this growth has been difficult. This didn’t deter Bakhshi, however, in his decision to take up the CFO role:
“It was an intellectual challenge – where do you find growth in a market that is saturated?”
CEO Gary Lamb’s recognition that Manx needed to change its culture to instigate growth sealed the deal for Bakhshi. Driving cultural change has been a big factor in the last year, in particular attempting to get the company to shed its bad habits typical of a monopoly.
In the past, Manx Telecom could be seen to be “aloof from its customer base, unresponsive, a little bit arrogant – all the things monopolies tend to get over time as they get complacent,” says Bakhshi. “The culture that’s in a company like that isn’t a company that’s hungry for growth”.
However, on a personal level, swapping the anonymity of London for the close Manx community has been difficult for the CFO and “takes a while to get used to,” Bakhshi explains.
Bakshi, who has been in the role since February 2016, has also found the change to PLC director has been a challenge, but one he has embraced.
“It was my first role as a PLC director,” he says. “I didn’t quite understand how different it would be to be sitting on the board of a PLC, compared to just running a division. The compliance aspects and investor relations were completely new to me, and that’s been a really steep learning curve.”
Bakhshi has relished this opportunity to learn: “It’s one of the big benefits of the job”.
Looking ahead, the company is unlikely to be rocked by internal political events. Two decades of uninterrupted GDP growth have ensured stability on the Isle of Man. Yet, this growth has been supported by a favourable tax regime that attracts inward investment – something that could be in jeopardy post-Brexit.
As a crown dependency, the Isle of Man is not part of the UK and is not a member of the EU, although by way of its constitution the island has always enjoyed the benefits of the UK’s EU membership, without having to adhere to EU regulations.
“It’s now a less certain proposition until we get clarity over Brexit,” says Bakhshi.
“Because inward investment is so important, the more joined-up that Manx Telecom can get with the Isle of Man government, and with other large corporates on the island, to give a more joined-up story to companies that might be considering coming over, I think we can help mitigate the impact of some of that uncertainty.”
“We’ve got room to improve in that area,” he says. “Even if the macro situation changes, we might attract more investment.”
So, are there any economic opportunities that Manx Telecom can take advantage of in the coming months?
Bakhshi is confident that quad play is an economically viable opportunity for growth. On the island, the company’s services are limited to connecting homes to broadband, yet within the telecoms industry, and in the EU and United States in particular, success has been borne from expanding services to include TV, landline phone and mobile.
“I think the enterprises on the island are under served – there’s a growth opportunity for us to just bring the island’s business life up to date a little bit more,” Bakhshi asserts.
For 2017, Bakhshi says that Manx Telcom has “no great capital plans”, but estimates capex spending to be about £8m, with a focus on extending out fibre to the cabinet technology.
“I expect us to spend a little bit more money extending out fibre to the cabinet technology so that people can get superfast broadband,” he says. “We’re going to refurbish our retail outlet and just make that a little bit more modern and attractive to customers.
“I don’t think we’d ever spend more than £10m or so a year. The industry is a very capital intensive industry and I’ve had my fingers burned before investing heavily upfront in technology that becomes obsolete very quickly,” he reflects.
Bakhshi sees the finance function within Manx Telecom changing over the next year, with a shift towards strategy and away from transactions and compliance.
“We do a lot of purchase order processing, paying supplier invoices, expenses. Half the team do transactional pricing. That will disappear over the next few months as we automate and outsource.
“We’ll hire more qualified professionals to generate more business insight which then transfers to strategy.”
This could be easier said than done, with a shortage of talent on the island and attracting the right people to come to the Isle of Man posing a problem for this forward-looking CFO.
“I’ve got the same challenge everyone has within finance, and that’s finding talent. It’s even harder to do on the island because people who haven’t visited, before they get on the plane it feels like a big thing. When you get on the island it’s easier to retain people, but I’m struggling to get people on the plane.”
So, any final advice for other CFOs?
“Get good people around you,” responds Bakhshi. “The technical aspects of the function are getting so wide that it’s hard for one person to be an expert in all aspects of it.”
“Really work at the insight,” he adds. “Understand what the numbers tell you about a business and what you need to do, rather than just report the numbers. I think that is going to be absolutely critical over the next five years.”
Interview by Emma Smith