Telstra CEO departing amid government animosity
Telstra CEO Sol Trujillo's successor will need to make conciliatory gestures toward the government and reconsider the company's strategy in order to remain relevant, analysts said after Thursday's announcement of his upcoming departure.
"The whole world is turning against the sort of attitude that Trujillo put on display," said Paul Budde, head of telecommunications analysis firm BuddeComm, referring to the fierce campaign Trujillo spearheaded against government regulation during his tenure.
Trujillo, who is American, joined Telstra, Australia's largest telecommunications company, in mid-2005. He had previously served as CEO of telecom companies US West, Graviton, and Orange. He will depart Telstra on June 30.
His anti-regulation campaign hit a low point with Telstra's ejection from the Australian government's National Broadband Network tender in December, after the company was found to have submitted an incomplete bid.
Sol Trujillo
(Credit: Telstra)The decision meant the writing was on the wall for Trujillo, according to Budde, who believes it will stand as an ignominious conclusion to a tenure defined mostly by the company's many conflicts with government policy.
Trujillo "has done some good things, but his legacy will be that he was the one who took on the government and lost," Budde said. Along with Trujillo's upcoming departure, the company announced as a 1 per cent fall in its first-half profit to 1.92 billion Australian dollars ($1.25 billion).
Trujillo's replacement is expected to be named before his departure. Telstra could well look externally within Australia or overseas, as it did with Trujillo, to bring in fresh blood and build on the infrastructure legacy he leaves behind, said David Cannon, telecommunications program manager with IDC Australia.
With Telstra's Next G wireless broadband network being boosted to 21Mbps and its consolidation and transition to an all-IP core well under way, Cannon said the new CEO will need to not only manage Telstra's role in the NBN but will need to guide the company to exploit its infrastructure to offer relevant--and profitable--new applications and services.
"It was a surprise that we got Sol in the first place," Cannon said, "but there are a lot of global CEOs that would like to be associated with a company that's leading-edge, technology-wise, and has a strong balance sheet.
Telstra going forward is going to be heavily media-orientated, and there is a major need for someone who is both media- and telecom-focused, and has a proven ability to lead Telstra through its changing business model."
Market Clarity chief executive Shara Evans, however, isn't so sure Telstra needs new blood right now. While "anything is possible," she said, "I would hope they'd be looking internally or at least within Australia."
The appointment of a new CEO would pave the way for a broad shakeup of senior executive roles, something Evans indicated might benefit Telstra's relationship with the government in the long term.
"It would be a face-saving gesture on all parts, since the government and Telstra have been at a standoff," she explained. She offered one caveat, however: "If the board remains the same, I'm just not sure how different the new CEO may be. No matter what happens, I think Telstra will still be reluctant to open up its infrastructure to the extent that the government would like."
Budde doubts the new CEO will come from inside the company because Trujillo's replacement "will have to be a far more diplomatic, more charismatic person who is willing to sit down with the government--and not the level of arrogance that Trujillo has displayed."
"Internal people are all tainted by the Sol brush, and none of them have stood up and indicated they want a change of direction," he said. "It's difficult to reconcile that with the need for a fresh start."
David Braue of ZDNet Australia reported from Sydney.
I've seen the prices go up, services slip behind, broadband become an endless joke and waited weeks for a repair man to fix a severed line. And the repair man gets a commission on any fees that he levies on a service call.
The accounts department seems incapable of getting a bill right. Could it be that they just overcharge, and understand that they will have to refund just a percentage of overcharges because many people wdon't check their bills?
Look, I'm a bit of a grumpy old man, but I date back to the PMG days when it took 2 years to get a phone, so I'm happy to say that things got a lot better up to the time of privatisation. Ahead of privatisation I beleive that capital investment was heavily reduced to boost the profit line and improve the share price. Since then it has become worse as the amigos have turned the screws ever tighter to deliver to shareholders their entitlement, and justify obcene salaries. But they have lost sight of the reason Telstra exists: to provde a good communications system to Australia. OK maybe flacid government has something to do with the outcome too, I think Sol is way smarter than yesterdays or todays government.
Hopefully the government (what have they got to do with Telstra's replacement CEO?) will use the new CEO as a chance to raise the bar a little on what is now a seriously flawed service company.
The Australians have a very unpopular communications minister, STEPHEN CONROY, who is desperate to introduce NET CENSORSHIP in Australia. Thank the Lord, I think he is failing.
That guy is a former union leader, and the way he dealt with the union red-necks, he thinks he can deal with the Australian public. That guy has NO QUALIFICATIONS in communications or his job what so ever.
Sol Trujillo, the Telstra CEO, was good enough to stand up against him. That's one bonus point for Sol from me. Who ever follows suit in his job, I hope will not try to become the current Australian Governments best friend. THEY ARE GOOD TALKERS, BUT OTHER THAN THAT USELESS!
- by NoVista February 26, 2009 6:25 PM PST
- And another thing!
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(5 Comments)What's with blocking certain e-letters? I was signed up for several wrt to finance, the economy, etc. One of which was a paid subscription. From around the beginning of the year, four no longer arrive. Complaints have been filed from providers and individuals like myself. The response has been minimal and the problem not solved.
For all I know, this is a stealth trial of the Conroy scheme. Or something.