Telstra chair slams BT, Telecom NZ management

Telstra chair slams BT, Telecom NZ management

Summary: Telstra chairman Donald McGauchie has slammed BT and Telecom New Zealand's management, saying the companies' underperformance measured against the Australian telco could not totally be put down to separation.


Telstra chairman Donald McGauchie has slammed BT and Telecom New Zealand's management, saying the companies' underperformance measured against the Australian telco could not totally be put down to separation.

Donald McGauchie
(Credit: Telstra)

"We clearly and markedly outperform both companies," McGauchie said at the company's annual general meeting. While he acknowledged separation had its role in what he considered to be poor performance, he also believed that BT and Telecom NZ's management were to blame.

"Now I'm not going to ascribe all of that to separation because I think their management hasn't been entirely, well certainly hasn't been anything like as competent as ours."

He brought up the overseas companies while railing against the possible separation Telstra could face if it were to win the tender to build the government's $4.7 billion national broadband network.

"Split us up and you would likely see the same mess that other telco companies forced down that damaging and costly path are now in. Just look at BT and Telecom NZ if anyone has any doubt," McGauchie said. "Separation has meant that both companies are so badly damaged they are no longer capable of a major investment — certainly not the sort of investment required to build next generation networks."

He reiterated Telstra's stance that it would not bid unless Communications Minister Stephen Conroy ruled out further separation for Telstra in the case of winning the right to build the network. Conroy yesterday was not ready to provide that.

McGauchie said that the board had not yet made a decision on whether or not it would submit a bid by the due date next Wednesday.

"Telstra has other options, whether we lodge an RFP [request for proposals] bid or not," he said.

Topics: NBN, Broadband, Telcos, Telstra

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • BT & separation?

    ZDNet has run several articles in regards BT and the effects of structural separation, that are at odds with what Telstra is saying.

    Who is right then? Why would Telstra lie about information in the public domain?

    TNZ woes are well known to have nothing to do with structural separation, as Telstra would also know.
  • Telstra strikes out yet again...

    Instead of looking at WHAT Telstra is doing to the Australian market, it strikes out at others. Classic signs of a business in trouble.

    Having lived in NZ for awhile, I can EASILY tell ANYONE that Telecom NZ is a FAR better company than Telstra.

    TNZ have customer service.
    TNZ have a wide range of services
    TNZ have competitive prices for their products
    TNZ easily share their exchanges with competing companies.

    Telstra are NONE of these things!! Telstra are running scared of the new Government and being separated. I *really* hope they are completely broken up - they deserve to be!!
  • Telstra share price

    That blithering buffoon McGauchie should concentrate on kicking the butt of his overpaid US management team into doing something about Telstra's flagging share price rather than mouthing off about phone companies in other countries.
    And I dont think some half baked NBN that is going to cost the earth and run out of control, like the unfinished IT transformation Trujillo keeps yapping on about, is the answer.
  • Telstra are fantastic

    Telstra are fantastic... at making profits by overcharging customers and shafting competing ISPs. The wholesale costs for accessing ports at exchanges is absurd, and their prices for internet plans are way above market rates.

    No other ISP could get away with charging $150/GB for excess data on ADSL... the usual rate is $3 or $5. Yet most customers don't realise how badly they are being shafted.

    Unfortunately, many older people will only trust "Telecom" to deliver their services, so Telstra keeps their customer base despite their ridiculous practices. They also leverage their vertical integration to attract more customers (for example, when calling Telstra about ADSL availability on our phone line, they went all-out to try and sell us a Bigpond plan).

    Structural separation is necessary for the future, otherwise this sort of anti-competitive and customer-unfriendly practices will just get worse. If the Government doesn't impose structural separation for the new network, then they deserve to be voted out at the next election.
  • sarcasm is obviously your highest form of wit

    sad to say mr conspiracy theory, that anyone who doesnt want excess charges just needs to fork out for a capped plan instead of going on the cheap and getting something with 200 or 400mb (which I admit are crappy limits)

    Structural seperation isnt needed at all, whats needed is for someone else to actually put up some money and compete, not compete to begin with and then stop their build when they realise its cheaper to leech off the incumbant.

    Also, if you call Telstra, expect to be sold bigpond. Your calling Telstra, theyre not going to run a fricken line test just so you can jump ship to another ISP. Call the leeches your trying to hook up with and ask them, if they dont tell you they cant put it on because of "complex products" like fax duet, rofl.
  • BT & seperation

    The guy is absolutely right about incompetent mgmt at BT. They are unable to manage large contracts, cannot manage costs, are unable to compete without protection or monopoly. Also, the institutional investors are ok with it this way as they only want the dividend, if the share price goes up they win, if it goes down their dividend yield improves, so accept the mediocrity
  • @telstra are fantastic

    i suppose when people ring your business you openly refer them to your competitor, then?

    of course not. whether you love or hate telsta, how about we use a little bit of sense in all of this. i know you may find it difficult, but please try.

    so people, even stupid people like you, should stop and think before making such *obviously moronic statements*. fancy bigpond trying to sell you bigpond, who would ever thunk it. criminal

    anyway lunch time, i'm now going to ring pizza hut and have them deliver my dominos pizza for me. i'm sure they won't mind - lmfao.
  • Tell The Truth Terria.

    Ho Ho Ho it must be nearly Christmas, and dream-time for the Anti Telstra delusional fabricators who will soon be exposed for the tricksters they are.

    Terria have no money and little hope of getting any. If our Government is foolish enough to award other than Telstra the NBN build we shall see unprecedented disaster for the Australian taxpayer.

    Face facts, Telstra will build a successful NBN for Australia with or without Government help, and will destroy by competition and delivery of superior service for all Australians.
  • "True Competition"

    What this country needs is regulation that promotes "True Competition" in an environment for investment. For too long OPTUS/SINGTEL have sponged thre free ride !!

    And why would not sponge off Telstra when they do all the investing

    I cannot remember the last time i saw a BOPTUS van west of Strathfield...
  • lol @ syd

    Syd, telstra is already trying to destory the competition, thats one of the main arguments against telstra, they will use every dirty trick in the book to get themselves into a posistion where they dictate the prices and if people dont like it, well then they dont have a phone,
  • @bt & separation

    umm, bt weren't structurally separated, they were functionally separated. you do know the difference dont you?

    bt, while having a go at telstra for their spin on bts functional separation, agreed structural or legal separation wasnt the answer.

    but for telstra to say separation has caused bt and telecoms share prices to plummet when world markets and stocks everywhere are at 10 year lows, is pretty funny.

    there's only one fact that keeps cropping up. that is bull***t reigns supreme on both sides. rofl,24897,23979990-15306,00.html
  • clarification

    you will note in the 3rd paragraph mr sainsbury makes a typo and says bt were structurally (instead of functionally) separated in 2005.

    this is contrary to bts statements in the first paragraph and towards the end of the atricle, where they clearly mention functional separation and the fact they only looked at *structural/legal separation*
  • Not so...

    Not so Joe! telstra is destroying the competition through ever more innovative ways, better products, better service, better coverage... that is why australians are choosing to do business with this great aussie company, not to mention when they ring tech support they can rest easy knowing their call is answered in australia, unlike, say a certain kabloptus? ;)
  • Dont forget!

    Well syd, I notice your particular comment "destroying the competition through ever more innovative ways"... You've got my agreement there! I've never seen a company come up with as many ways to maintain monopoly, repel competition and hinder an open market, Telstra want a fully free market with no government regulation, Of course they do! in their current posistion without the ACCC/TIO watching them telstra would undersell all the other telcos (granted, thats their right) until everyone else is bankrupt, and their the only one standing... retaining their monopoly... this company doesnt want to share, it wants it all.... Oh and syd, call Bigpond tech, ask them what company they work for "teletech, an international company working on behalf of telstra" they fired 800 so they could ship the jobs to india, at least all the other companies are only cutting staff to stay afloat...

    and lol at kabloptus... you been staying up late watching Phil Burgess or something?
  • Telstra wont play if they cant make up the rules.

    Sounds like primary school doesn't it?

    Telstra is pathetic. Even with the distinct advantages they have over other telcos (the name for one) they are worried about having to actually compete. In an arena where they have been able to do what they want without any fear of real challenge they reign supreme but now they're beginning to squirm.

    In the U.K. there has been a massive change in the market since BT lost its grip, competition has been heavy and consumers have been the benefactors.

  • Telstra chair slams BT, Telecom NZ management

    the NGN must be run seperate to any retail and/or wholesale concern.
    Doesnt matter WHO builds it, the above MUST happen. For the sake of the consumer.
  • none of them will play!

    if you care to look on other zd blogs you will see i fly up telstra as much as terria, optus etc and have absolutely no allegiances to any of them. i applaud them all, when they do good and attack when they do not. so obviously i tend to attack more often than applaud. lmao.

    however, in this case, i find peoples lack of sense rather odd. of course telstra wont bid if it doesn't suit them. they have said that, as have optus/terria. obviously aapt, transact and soul have done likewise. optus even said - zd 21.10.08 - theyll stop investing if telstra wins the nbn.

    so lets get one thing straight. *telstra are trying to dictate nbn terms*, but no more than optus and lets not forget some of the headline grabbing announcements from messers malone and hackett thrown in there too.

    so if we all take our petty biases out of the equation and look at it rationally, they are all in there to get whatever they can out of it for themselves. anyone who believes otherwise really is a fool!

    lets be honest now, you and i would do the same, in our line of work or regarding our investments, wouldn't we? the stipulations/returns aren't to our liking so we'll work/invest elsewhere, surely that is basic commonsense.
  • TCNZ Seperation...

    Telecom NZ has been seperated yet, they are still planning it. The woes it is experiencing is a result of poor and stagnant management leadership over the last few years, no reinvestment into it's network is an example of why they are in the shape they are now. If they had pumped money back into their infrastructure, they wouldn't be in the mess that they are now... Telstra, you'll need to come up with better than this rubbish, seriously who do you think you are fooling???
  • Apples and Oranges

    Telstra's comments are a bit disingenuous and off the point – BT operates in a totally different market and is subject to higher levels of competition and regulatory direction – bit like comparing apples and oranges. Competition from other UK communications providers and other global providers has seen BT’s margins erode. To maintain revenues BT has had to ‘re-engineer’ itself, embrace new technologies in an attempt to be agile like smaller niche players – not always successfully though.
    Telstra on the other hand operates in a small market and is not subject to the same levels of competition. This allows Telstra to maintain a narrow and traditional telco model that sweats legacy assets – as indicated by profit margins that are not eroding. With these circumstances there is perhaps little incentive to change/innovate. This reality is reflected in the portfolio of services delivered over what is generally an aging infrastructure at high cost to the end consumer – keeps Telstra shareholders happy if the profits keep on coming I suppose.
  • Split Telstra Now!

    Telstra has to be split up. They are a monopoly that abuses their position & need to be stopped. The facts are not as Telstra would have you believe. They pay people to comment on these issues & these people will not own up. They mess up from time to time just to prove they work for Telstra.