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February 27, 2009
So Sol Trujillo departs in June, richer by at least $40 million. Telstra share prices were $5.06 the day Trujillo started and they closed at $3.67 yesterday. He's been pushed out. Is Donald McGauchie next?
Trujillo's master plan to achieve the transformation of Telstra by rolling out high-speed broadband across the country is in tatters. His tenure as CEO of Telstra was marked by war with the Coalition government and the ACCC about regulation of pricing and sharing of infrastructure. Telstra refused to participate in the Rudd Government's national broadband network (FTTN) because it did not receive guarantees that there would be no operational separation, and if Telstra was released from the access rules that would otherwise require it to let competitors use the network. Telstra's strategy was to remain whole and the dominant player--the gorilla in the communications and media market.
Clearly Telstra has decided that it didn't want to fork out the $5 billion needed to build the FTTN network in the capital cities, and it reckons that a hybrid roll-out of different technologies is cheaper and more commercially acceptable to Telstra. Technology has moved on in the past four years. Trujillo's big idea of FTTN has been dumped. The future is wireless.
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What is the surprise? Sol Trujillo did exactly what the Howard government employed him to do. He destroyed the monopoly telecomms operator and hastened the demise of the ICT industry as an employer of Australian graduates. In 1992 Telstra was responsible for 1 in 4 dollars spent in ICT. It may have the same market presence but the Telstra board have been keen proponents of offshoring ICT work to India. When Trujillo was appointed there was a lot of media coverage of his appalling performance at south west Sprint. Fortunately I have limited knowledge of Telstra's ability to connect subscribers to the copper wire network, although I have been told that Telstra rations ADSL connections through the telephone exchange. Meanwhile all the laid off linesmen and techos eke a living out what ever contract work they can glean, heaven help them if their wife hasn't got a good phone manner and is on top of the customer payments.