Telstra CEO Sol Trujillo today declared much of the 2007-08 operating performance “best in the world” as net profit jumped a healthy 13.5% to $3.7 billion.
And the board clearly agreed as Sol was given a generous 86% of his maximum $6 million short term incentive as his overall pay leapt from $11.8 million to a record $13.4 million, despite last year’s historic majority protest vote against the Telstra remuneration report.
Sol’s media-shy deputy, chief operating officer Greg Winn, saw his pay leap from $5.7 million to $11.2 million, meaning Telstra’s two biggest US imports shared $24.6 million in 2007-08. And this was despite Telstra missing the target of migrating 5 million customers onto its new systems by June 30.
Amazingly, Sol didn’t get a single question about his pay during this morning’s 45 minute press conference and on the question of tenure he stuck to the normal line about staying for as long as he’s getting the job done.
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We’re now three years into the promised 5-year Trujillo revolution and the ultimate goal of free cash flow topping $6 billion by 2009-10 looks increasingly tough even though it rose by one-third to $3.9 in 2007-08.
That said, growth in broadband, mobile data, wireless and even the Chinese website business was impressive and Trujillo gloated that Telstra was growing 4 times faster than Optus in several key segments, although the Singapore Government’s business wasn’t mentioned by name, of course.
Indeed, revenue growth of 4.8% to $24.7 billion appears stronger than any other first world incumbent telco, which is another of way of saying that Telstra is using a combination of market power and business savvy to crush its hapless competitors such as Hutchison and Telecom New Zealand.
Unfortunately for shareholders, the market was underwhelmed as Telstra shares dropped 15c or 3.3% to $4.35 this morning which means they remain more than 20% below the level when Sol was appointed in mid-2005.
However, with today’s 14c final dividend, $1 has been paid out since Sol arrived and 2007-08 was the first time in several years that Telstra didn’t borrow to pay dividends.
The ambitious plan to cut 12,000 jobs by 2009-10 has been cut back to “at least 10,000” and Sol was forced to defend walking out on union talks. He claimed Julia Gillard was wrong on Insiders because Telstra’s labour policies are consistent with the law. Indeed, he accused the Telstra unions of proposing “illegal” schemes.
The national broadband tendering process copped another broadside from Trujillo who claimed the delay is costing the economy more than $2 billion a month and he also promised not to cut the dividend even if Telstra wins the job.
Finally, there has been a changing in the guard in Telstra’s spindoctoring department as the laconic Andrew Butcher, who spent more than seven years as Rupert Murdoch’s New York-based spinner, fronted today’s briefings.
Maybe this will be signal a less combative approach, especially with News Ltd, although someone will need to advise Phil Burgess.