The art of the deal: David Yuile, former chief executive, AAPT

Not many telco executives have crossed swords with David Teoh and come out smiling. David Yuile is one of them.

David Yuile. Illustration: Johannes Leak.

Not many telco executives have crossed swords with TPG Telecom boss David Teoh and come out smiling. David Yuile is one of them.

He might not be a regular fixture in the business pages these days, but telco industry veteran David Yuile – nowadays a director at RTI Cable – has made a habit of turning around poorly performing assets and extracting a healthy premium when suitors came knocking.

The encounter with Teoh came about early in Yuile’s tenure as the chief executive of ailing fixed-line telco AAPT. The business, owned by Telecom New Zealand, had already offloaded its consumer arm, and Yuile and his team had been put in charge of cutting the wholesale division down to a more manageable size and made ready for a suitor.

TPG duly obliged with an offer in 2013, and the subsequent $450 million deal ended up giving Telecom New Zealand its desired exit, and David Teoh the first piece of fibre infrastructure that is the backbone of TPG’s internet business.

For Yuile, the negotiations with TPG highlighted the importance of one cardinal rule of deal-making: persistence

“You have to be persistent, because things don’t always work the first time and just because something slips away once it doesn’t mean it’s all over,” he says. “With AAPT it took us a year and a half before we sealed the deal. TPG took a look, they walked away but they came back eventually, so you have to be patient.”

Another lesson from the TPG tryst, according to Yuile, is having a clear idea of what you are chasing. It’s a skill he says Teoh has in abundance and one of the reasons TPG has been so successful in the market.

“The thing I liked about him was that he was very clear about what he didn’t like about the initial deal, so he was very honest and articulate about it and he was happy to wait,” says Yuile. “He was also right, because there were things that we needed to fix, so 18 months later when we came back to the table the deal was done.

“I am happy that we gave them a good business and they have been able to take that much further.”

‘Yuile says a good deal-maker must be willing to buck conventional wisdom from time to time.’

The AAPT deal was just the start for Yuile, who moved on to oversee the high-stakes dissection and sale of the network infrastructure operator and data centre owner Nextgen Network. Under Yuile’s tenure the network assets were sold to Vocus for $861 million and the data centres sold separately to US giant Equinix for a touch over a billion dollars.

Yuile had to think outside the box to secure the deals, but he says a good deal-maker must be willing to buck conventional wisdom from time to time.

“Most people assumed that we would sell the data centres first but it was a big strategic decision by us to not do that,” he says. “We needed to hold on to the data centres and invest more capital in them. We got the funds we needed for that by selling the networks first, and then sold the centres for a better price later. It was the right call but it wasn’t very apparent at that time.”

Having generated close to $2 billion in gains for his shareholders, Yuile has done well in navigating the so-called “guts of the internet” – the hidden fibre infrastructure that is the backbone of all things digital. It’s a space he says he was lucky to pick up early in his career.

“The digital future was something that seemed obvious to me. It was always going to be amazing, but maybe not quite as amazing as things have turned out to be. I was more optimistic than most and you know that’s something that has always helped me. The people who are rewarded are those who put themselves out there and don’t hedge their bets.

“It’s easy to be in the middle but you have to be bold and pick your theme. In my case it was my belief 15-20 years ago that data usage was going to explode and that was going to make digital infrastructure the new shipping lines.”

But there’s a fine line between confidence and arrogance and for Yuile, cultivating good relationships is a must.

“You’ve got to have someone on the buy side who gets a trend just as well as you do,” he says. “You have to work hard with people to build trust and rapport – ultimately they make a decision on what they see in you. You want to be optimistic but don’t be sycophantic; the facts are facts, and sometimes you have to admit that things are not perfect. You will be surprised how many times people appreciate it when you give them a balanced view. They take a lot of faith from that.”

Yuile adds the digital revolution is still in its early days and that means there’s still plenty of money to be made in the space. “We are not even halfway through it and there are still a lot of opportunities in this space, so anyone who says there aren’t any deals left here, they just don’t get it,” he says.