Business

Friday February 27, 2009

Telstra CEO to leave, H1 profit falls


WELLINGTON: The feisty boss of Telstra Corp will stand down in June, raising hopes his exit will improve relations between Australia’s largest phone company and the government and generate new business.

Chief executive Sol Trujillo has spent four tumultuous years at the top, arguing openly with the government in defending Telstra against official efforts to deregulate the local telecoms industry and to bring in more investment from rivals.

A little over two months ago, Telstra was dumped from the running to build a nationwide broadband network.

Some investors welcomed Trujillo’s departure, for which the company gave no specific reason yesterday, but Telstra shares fell as the company cut its current-year earnings guidance.

Trujillo’s exit could open the way for Telstra to be re-admitted into the process to build the national broadband network (NBN), Credit Suisse analyst Sandra McCullagh said, writing in a client note that a new CEO could mean a less adversarial approach to government.

Telstra’s July–December profit dipped 1% to A$1.92bil, with higher mobile and broadband revenues helping offset lower fixed-line income.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew 3.1% to A$5.33bil, while group revenue rose 2.7% to A$12.7bil. Telstra trimmed its full-year forecast to 56% growth in EBITDA from a forecast 67%. It kept its forecast for the year to June 2010.

Trujillo said he wanted to spend time with his family, and wanted to ensure a smooth transition at Telstra.

“The feeling was that this is the best point in time to do it, to strike the right balance,” Trujillo told a media briefing. — Reuters

An American with extensive telecommunications experience, Trujillo was hired in July 2005 to lift earnings at Telstra. He devised a five-year plan to improve the company’s performance, which is about two-thirds complete.

Trujillo was almost immediately at loggerheads with the government over plans to offer rivals, such as Singapore Telecommunications unit Optus, access to Telstra’s infrastructure. — Reuters


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