Who's up for the Telstra challenge?

analysis The sudden resignation of Telstra's chairman, Bob Mansfield, throws into sharp relief the raft of issues facing the telecommunications player.Mansfield, an amiable and approachable character, resigned last night amid anger among some of his fellow directors over a renewed proposal for Telstra to acquire media heavyweight Fairfax for around AU$3.

analysis The sudden resignation of Telstra's chairman, Bob Mansfield, throws into sharp relief the raft of issues facing the telecommunications player.

Mansfield, an amiable and approachable character, resigned last night amid anger among some of his fellow directors over a renewed proposal for Telstra to acquire media heavyweight Fairfax for around AU$3.5 billion. He became chairman of the carrier's board in January 2000 after joining the board in November 1999. His resignation took effect immediately.

Telstra's chief executive officer, Ziggy Switkowski, who, with Mansfield, pushed the renewed proposal to the company's main shareholder, the federal government, is now believed to be under some pressure.

Switkowski recently presided over Telstra's lowest full-year net profit for five years, at AU$3.4 billion for 2002/03, down from AU$3.7 billion the previous year. The chief executive has pledged to restore revenue growth from 2.5 percent per year to 4 percent, a promise viewed with scepticism by some analysts.

Both Mansfield and Switkowski have faced an extraordinarily difficult task in their time at the top. Telstra is an unwieldy behemoth whose legacy lies both in extremely mature markets and its decades as a wholly government-owned, engineering-driven organisation. It is largely prevented by competition law and its enforcers from using its muscle to seize share of new markets from smaller, more nimble competitors and its board is plagued by the political and commercial agendas of its members. Its present ownership structure is the product of political expediency, a poisonous mix of government ownership and privatisation that ineffectively combines the often competing agendas of politics and commerce. Neither Mansfield nor Switkowski can be immune from criticism -- their judgment in some areas, such as the timing and structure of the push into Asia via the Reach venture, is rightly regarded as questionable -- but it comes as little surprise when senior executives and managers founder when dealing with such a volatile mix of issues.

Lindsay Tanner, the Opposition spokesman on telecommunications, provided a brief snapshot of the politicisation bedevilling the carrier following Mansfield's resignation. Tanner claimed in an interview that Prime Minister John Howard was "allowing [the carrier] to go and try to buy major media companies at a time when ordinary Australians are paying through the nose for line rental fees, they are getting sub-standard service, staff are being slashed [and] investment in the network is being slashed".

Mansfield's replacement faces a difficult task navigating the treacherous reefs that sank the chairman. It is an unenviable task and certainly one which, if carried out successfully, would mark an outstanding player. Finding the right man or woman is a task interim chairman John Ralph and his fellow board members must get right.

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