Graeme Millar, who recently stepped down as JT chief executive to head up the newly formed IoT company, spoke to Ian Heath about a connected future.
After 12 years at the helm of JT, Graeme Millar is embarking on a new chapter heading up the ‘Internet of Things’ division which was recently sold to private equity firm Perwyn.
He has high hopes for the company, which he said has ‘exceeded all expectations’ in terms of growth. But the immediate questions for the less tech-minded may be what is the ‘Internet of Things’ and why has JT become involved?
Mr Millar explained that while the term might not mean a great deal to some, the internet of things was something we were all probably familiar with, one way or another.
‘The internet of things is really what’s happening with almost every electronic device in our life being connected up to the internet.
‘You might not think you’re using it, but if, for example, you have one of those Hive temperature controls and you’ve got an app on your smartphone, so you can turn the temperature up and down at home, you’re using smart technology and you’re using the internet of things.
‘Maybe you’ve got some smart plugs that you can remotely turn on and off. That’s the internet of things. Or increasingly a lot of cars have got SIM cards in them. There are now apps you can get from motor manufacturers where, if you lose your car, you can find out where it is and it will direct you back. That’s the internet of things. People are in fact coming across this stuff in their daily lives all the time,’ he said.
Established in 2014 as part of an international expansion programme, JT’s Internet of Things division was a huge success story, doubling in size each year and selling in June this year for a reported £200 million.
The division employs 70 staff worldwide, including 20 in Jersey, and is now the property of private equity firm Perwyn, which specialises in rapid growth technology companies. JT will retain a minority stake in the new company, which will continue to be located in Jersey.
Not only will JT benefit from the sale proceeds, the Government of Jersey will receive a share of the windfall, although the amount is unconfirmed at this point.
Discussing the sale, Mr Millar said that it had been driven by a need to sell the rapidly growing IoT division, which was becoming like a ‘teenager who had stayed at home too long’.
He added that the sale was ‘categorically’ not prompted by the government pushing for a cash injection.
‘At no point in time has the government ever asked us to sell this or any other asset to raise money. I’ve been in charge for 12 years and that has never happened. This was a decision by JT and by the board, because it was the right thing to do at the right time.
‘We thought it’s the optimal time. The division had grown very rapidly, it was doubling in size every year and it was getting pretty big, pretty quickly. Fast growth businesses demand a lot of management time and attention, and they demand money as well. It’s got to the point where it was like having a teenager at home and there’s a moment when that teenager has to leave home. We brought the child up, we’ve nurtured it, we’ve given it all the care and love and attention we can, but it’s just got to that point where the kid’s getting too big for the house and it needs to go.’
He added: ‘There’s still an umbilical cord. JT is still supporting that business and providing connectivity services, so there’s a long-term agreement for JT to keep supplying it and JT retains a minority stake in it. As it becomes ever more valuable, JT will continue to share in that but, if we didn’t do this now, instead of being an island telephone company that owned an internet of things business, we’d be an internet of things business that just happened to own a small island telephone company. And another good reason why it’s a good time to sell is it’s a very hot sector at the moment. Prices for these kinds of businesses are very high and who knows how long they will stay like that. We thought given the size, the growth rate, the fact that businesses in this area are selling for a lot of money, it was a good time for us to cash in some of our chips, although we retain a few chips for the future. It’s a fine judgment call but we put a lot of time, effort, money, blood, sweat and tears into this.’
The initial development of the Internet of Things division, Mr Millar explained, was driven by a need for JT to harness on a broader scale underutilised assets that the firm was saddled with as a telecoms provider operating on a small island.
‘The problem with JT is it’s a small player in a business that volumes at scale. A manifestation of that is when we bought the 4G network in 2014, we bought the smallest one we could, and it was built for 2.5 million subscribers.
‘Even if we had every customer in Jersey and Guernsey, and all the cows as well, we still would have a lot of capacity in the network. So, we said, what are we going to do with that?
‘We took those assets and we started to try to get some returns and money back on stuff that we already had that we were having to create and build for the Island. That was the motivation behind starting it.’
He added: ‘We actually have a series of businesses that were growing, and this is the first one that’s got to this stage. When you start things you don’t know exactly where they’re going to end up.
‘When we started in 2014, we didn’t know whether it was going to work. That’s part of having a portfolio of ideas of product. When we started the Internet of Things, we thought we were onto a good thing but I don’t think we ever believed it would be this successful, this quickly.’
The development of the Internet of Things division, and other outward-looking projects, saw JT dealing with companies and developing technology for all sorts of uses across the world.
Mr Millar described some of the projects where JT SIM cards and technology have been used.
‘We have a company in Canada, which makes inpatient defibrillators. If the doctor has diagnosed you can have a device implanted in your chest and if your heart stops it restarts it.
‘This company makes one of these devices, it’s connected with a JT SIM. It sits in someone’s chest with a JT SIM in it with a radio transmitter and it tells the doctor how the patient’s heart is beating and so on. The doctor can kind of see in real time how you are doing.
‘Also if something goes wrong with the device, then the doctor gets told straight away. That gives you an idea of the kind of things that the internet of things makes for us.’
He added: ‘There’s also a company in California that makes cleaning robots. These days they’ve developed one that is completely driverless and they’re totally automatic. These robots actually clean all the Walmarts in A merica, and they’re all connected with JT SIMs.
‘Another big customer of ours makes hunting cameras. When an animal goes past, the camera takes a picture of it. They’ve got a bit of software in them that can analyse the photo and work out what kind of animal it is. It can be used to transmit back and say, this animal is here.
‘And another use for the SIMs is we have what we call our broadcast SIMS. Many of the world’s biggest TV companies use JT SIMs in cameras, primarily for sporting events.’
Looking to the future, Mr Millar said that the money received by JT from the sale would be used to invest in cyber security, replacing Chinese equipment and paying off the remaining debt from the gigabit fibre project, among other things.
With regard to the new company, he believed that it would help prompt a new dawn where Jersey was seen as a true hub for digital business, perhaps even a ‘Silicon Beach’.
‘This is incredibly good news for Jersey’s digital sector and will result in more jobs and actually I suspect there’ll be a halo effect.
‘I think that it will enhance Jersey’s reputation on a global stage in terms of being a place that is the incubator of great tech businesses. About 60% of all of the world’s tech private equity investments and firms are in Silicon Valley, and it’s a little bit chicken and egg, but one of the reasons why Silicon Valley is so successful is because of the ability of young tech entrepreneurs to be able to come up with an idea like Twitter or YouTube and find people willing to invest in those businesses.
‘The reason this is so seminal for Jersey and for the tech businesses in Jersey is people will sit up and take notice that Jersey’s got the people and the talent here, that it’s got the government support and underlying infrastructure, and, quite importantly, it’s got the capital to build and grow big growth tech businesses.
‘Entrepreneurs and capital providers swarm like bees to a honey pot to success stories.
‘The biggest one is Silicon Valley, you have Silicon Fen around Cambridge and there is no reason why we can’t be Silicon Beach here in Jersey.’