This week’s big business event is Friday’s all-singing, all-dancing Sol Trujillo Show with a cast in the tens of the thousands and an audience of millions. The question for investors though is deciding whether the script is credible or if it’s been written to suit the producer’s other purpose – merchandise sales afterwards.
Trujillo’s strategic update will be followed on Monday by the official launch of the T3 sale – but that’s the business of flogging programs, t-shirts, hats and mugs after a successful performance. Whether anyone should be interested in the guff that Nick Minchin’s peddling on Monday will depend on the reviews of Friday’s performance.
Malcolm Maiden previews the events in the Smage, promising a happy story that Minchin can run off on Monday. But the doubt must exist that Telstra’s strategic update has been written for Minchin’s purposes, rather than something that Minchin can happen to use.
For all the up-front fighting between the McGauchie/Trujillo Telstra and the federal government, there have been two important backdowns that taint the telco’s credibility.
Everyone seems to forget that one of Trujillo’s sharpest early criticisms of the old management was that it was borrowing money to pay dividends – an unsustainable disaster in the making, something that the ratings agencies should be dealing with severely. But for the sake of T3, McGauchie/Trujillo continue to borrow money to pay dividends.
And then there’s the promise Telstra gave the government to stop bagging the regulatory regime during the T3 process. If the company can be so easily silenced about something it has claimed to be so important, why should it be trusted about any projections of profitability?
The decision whether to take up T3 shares or not remains one of trust – and all the multi-million-dollar advertising campaigns Minchin can sponsor add up to nothing. You either trust Sol to deliver the promises that will be made on Friday, or you don’t. The progress that will be spoken of at great length are just steps along the way – they’re still a long way short of delivery, thus leaving that question of trust.
Which is why investors will be looking through the tap dancing and magic tricks to try to divine the extent to which Friday’s show has been bent towards Monday’s merchandise sales. Ah, the magic of show business and $8 billion worth of shares – all about the confusion of illusion and reality.