Telstra CEO departing amid government animosity

Sol Trujillo, an American and the former CEO of US West, will leave Australia's largest telecommunications company after four years on the job.

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 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.

 

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