latest from the australian

wonder why they keep digging? at least a few positives in this one!
wonder if 25 will hold today?


He had to have Soul, but now he's done a Pimpernel
Font Size:DecreaseIncreasePrint Page:Print
Cath Hart | May 31, 2008

THEY seek him here, they seek him there - his staff, associates and reporters seem to seek him everywhere.

After weeks of trying to establish whether mid-tier telco Soul is in cash-flow heaven or management hell, some telco types have begun to liken the company's new boss, David Teoh, to none other than the Scarlet Pimpernel.

It seems mystery has been the habit of a lifetime for the reclusive, hardworking businessman.

Since 1994, references to the Malaysian-born Teoh in Australia's major daily newspapers have been limited to 21 articles.

But Teoh's average of 1 1/2 outings in the press each year is inflated by the three stories run in The Australian this week about discontent among resellers and current and former staff members about the new management since the publicly listed SP Telemedia merged with Teoh's Total Peripheral Group in April.

Teoh, in a demonstration of consistency, at the very least, has ignored calls from The Australian this week, preferring instead to release statements to the stock exchange about the concerns.

Long-term associates say his management of TPG demonstrated his keen eye for profit-making opportunities, and that he will likely form Soul into a solid market performer.

However, they concede that his lack of communication internally and externally does not play well in the corporate culture of Australia's public companies.

There's a lot the 52-year-old might talk about at the moment.

At least two Soul resellers have initiated court proceedings against Soul, claiming the telco has failed to pay them hundreds of thousands of dollars in commission fees over the past month.

The Workplace Ombudsman is investigating the company in four states over 30 allegations that it failed to pay staff wages and entitlements.

Staff in Soul's West Australian office have been whittled away over the past 12 months from more than 400 to about 50 - prompting concerns among the remaining workers that the company is following the strategy adopted by the Tristar car parts manufacturer and hoping they will quit, so that it can avoid costly redundancy payments.

Add to the mix a litany of complaints from customers about Teoh's decision to move the Soul call centre from Australia to his own operation in Manila, which has seen wait times for calls blow out to more than an hour in some cases.

And The Weekend Australian can reveal that the Telephone Industry Ombudsman is investigating complaints from about 100 Soul customers regarding a total of $200,000 in outstanding fees promised to them if they switched to Soul from their old carrier.

Despite having so much to discuss, Teoh again declined to respond to calls from The Weekend Australian yesterday.

The common themes in the claims are that they are from small operators who say they have had significant difficulty ingetting responses to queries from management.

They fear that the only way they will recoup their funds is to pursue Soul through the courts, but for most of these small creditors the choice between trying to recoup their money through costly, time-consuming court actions or just trying to move on and absorb the sting of their loss is easy.

What isn't clear, however, is how many of these problems Teoh has inherited and how many of them have emerged under his short stewardship of the telco.

One businessman who has dealt with Teoh describes the Sydney-based executive as erratic but stubborn. Numerous people spoken to by The Weekend Australian suggested Teoh seemed reluctant to negotiate new contract terms.

However, one associate says that Teoh will be good for Soul. "The new management at Soul-TPG is acutely focused on where their business is going and what needs to be done," he said.

"Post-transformation, I'd expect Soul to be a much leaner and more focused company."

After arriving in Australia in 1986, Teoh established the privately owned TPG, which included PC assembly and wholesaling, networking and research and development in its operations.

Teoh began the group's internet business in 1992 after buying the Csironet network from the federal Government, and went on to build the ISP's subscriber base to 200,000 to become a cornerstone of the business.

TPG recorded $12 million in net profits after tax (NPAT) in the 2007 financial year, with forecasts of $28 million NPAT in 2008.

In April this year, Teoh successfully negotiated a $250 million merger of TPG with the publicly listed SP Telemedia, bringing together TPG's 200,000 ISP customers with Soul's 500,000-strong customer base.

Following the merger with TPG, Teoh confirmed that Soul has begun "a strategic reduction in the number of staff employed in Western Australia, with some functions being moved to NSW and other functions being performed offshore", a move believed to reflect the increasing costs of running a call centre in Perth as the resources boom pushes up the price of labour.

Teoh explained to the market on Thursday that he had been spending his early weeks as executive chairman and major shareholder of SP Telemedia "understanding the Soul business and taking steps to improve the efficiency and profitability". Under the merger deal, Teoh became executive chairman and the controlling shareholder with a 39 per cent interest.

He also received $150 million cash, which was raised as debt by SP Telemedia.

This week's groundswell of consternation from Soul's staff and business associates across the country prompted speculation that the company had either been maligned by cash-flow problems or was suffering teething problems under Teoh's new reign.

The market responded to the uncertainty by wiping 10 per cent off SP Telemedia's share price, which dropped from 30c on Monday to 25c at the close of the market last night.

The less popular theory that Soul has had cash-flow problems centres on the suspicion that the $150 million borrowed by SP Telemedia for Teoh's personal coffers has stressed Soul's accounts.

Teoh released a statement to the Australian Stock Exchange on Thursday saying Soul and TPG's combined achieved earnings before interest, tax, depreciation and amortisation for April was $7 million and that it has more than $20 million in cash reserves.

The theory that Teoh's management approach is to blame holds much more sway both among his detractors and supporters.

In addition to those gripes, speculation has emerged about the circumstances of the departure of former Soul CEO Michael Simmons weeks after the merger had been finalised.

It is understood that Simmons, who declined to comment yesterday, expected to be kept on in the role of CEO, but after returning from a short holiday suddenly resigned just two weeks after the merger, turning up as the bid manager for the Optus-led Terria consortium, which is vying for the federal Government's $4.7billion national broadband internet contract.

Other staff spoken to by The Weekend Australian claim they are yet to receive their entitlements, despite claims from Teoh that Soul has paid all employee entitlements.