Up until recently, the Government has taken a hands-off approach to the management of Telstra, as we have seen over the last 9-10 years. But when Sol Trujillo came on board he made it clear shareholders would be his priority and that he wasn’t interested in pursuing the social benefits the Government is expected to provide through Telstra. The consequence is what we see happening now: the Government has been forced to become more involved and that is becoming a major problem.
As the Government is the majority owner, they are now being forced to step in, impose a more active board member, someone who will represent their interests, and that of course is at odds with the objectives of the other board members.
The question then becomes, how successful will Cousins be? If he’s knocked back by his colleagues, it’s going to be an uphill battle for him and therefore the Government to achieve their aims. Will that make it easier for Telstra to meet the challenges it faces right now? No. They are not going to be solved in the short term. Maybe they will be solved in a year’s time, but that will be too late.
I suspect shareholders will be divided on the issue of Cousins’ appointment. Under Trujillo, the share price is going down so they can’t be all that happy. Does that mean they want change, and this sort of change in particular? What you might see is shareholders grabbing any opportunity to get a better result for themselves. But will that have any effect? I don’t think so. So you’ll find some shareholders support it, but I don’t think it’s going to make any difference.
In pursuing the appointment, the Government is looking after the long term shareholder. But Telstra also needs to put structures in place to better participate in digital media, and that’s got nothing to do with Cousins or the Government. At the moment, Telstra wants a monopoly on everything and they need to get real. Nobody else in the world gets that and if they’re going to push the company forward they need to face that reality.
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