Telstra CEO Sol Trujillo's successor will need to make conciliatory gestures towards the government and reconsider the company's strategy to remain relevant, analysts have concluded in the wake of this morning's announcement that Trujillo will depart the company on June 30.
Telecommunications analyst Paul Budde (Credit: BuddeComm)
Like it or not, Telstra CEO Sol Trujillo's successor
will need to make conciliatory gestures towards the government and
reconsider the company's strategy to remain relevant, analysts
have concluded in the wake of this morning's announcement that
Trujillo will depart the company on June 30.
"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.
The whole world is turning against the sort of attitude that
Trujillo put on display
The decision meant the writing was on the wall for Trujillo,
according to Budde, who believes it has put Telstra on the back
foot and will stand as an ignominious conclusion to a tenure
defined mostly by the company's many conflicts with government
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 today. "Telstra's share price reflects that the share market
didn't believe that fighting the government was a good idea. The
financial markets aren't just looking at profits now."
Telstra's share price was slightly down by mid-day, fuelled by
the news of Trujillo's departure as well as a reported 1 per cent fall in
first-half profit to $1.92 billion.
Even as observers weigh up the tone of Trujillo's legacy,
speculation about Trujillo's successor is gathering speed as
observers debate who is best suited to step into his shoes. In the
statement announcing Trujillo's departure, Telstra said the board
"is well prepared with succession planning and will now formally
commence a wide-ranging search for a suitable successor."
Trujillo's replacement is expected to be named before his
departure on June 30. 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
Now that they've been kicked out of the NBN process, one of the only face-saving ways to get back into the dialogue is to literally have a different set of people talking.
Market Clarity's Shara Evans
With Telstra's Next G wireless broadband network being boosted to 21Mbps and its consolidation and transition to an all-IP
core well underway, 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 telco-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 today, "I would hope
they'd be looking internally or at least within Australia.
[Recently departed COO] Greg Winn mentioned they were looking
internally, and that Telstra has strong succession planning in
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.
"Now that they've been kicked out of the NBN process, one of the
only face-saving ways to get back into the dialogue is to literally
have a different set of people talking."
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
Budde, however, is confident that such opening-up is inevitable:
"it is going to happen one way or another — and it's much better
[for Trujillo's successor] to say 'let's participate in the
discussion of what's needed'. We are seeing the end of an era for
Telstra, and we'll start seeing that telecommunications as an
infrastructure will have to be treated as being for the common
Citing the experience of ex-monopolist telcos in New Zealand,
the Netherlands and elsewhere, he said Telstra has no choice but to
take a more proactive stance towards the government: "Telstra lost
a very, very valuable position at the table, and it is at a clear
disadvantage without it," he explained. "It will have to win that
And the person to do that? 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 explained. "It's difficult to reconcile that with the need for
a fresh start."