Telstra Andy Penn

Telstra chief Andy Penn will have breathed a small sigh of relief when the Australian Communications and Media Authority (ACMA) announced yesterday that it has finally finished plans for the spectrum auction of much heralded 5G mobile technology.

In a complex transaction to be held in late November, from which the government is hoping for a $1 billion windfall, ACMA will auction off 125MHz of spectrum in the 3.6GHz band in 350 lots across 14 regions of Australia. Penn has signaled that an early-mover advantage, backed by billions in network investment, in 5G is central to his dramatic plan to restructure the telco with his “Telstra2022” plan.

The strategy was unveiled at a June investor day timed to coincide with a profits warning that sent Telstra’s already fading shares plummeting. On July 30 Penn named chiefs of all but one of the new divisions that will operate from Oct 1.

The timing was interesting, odd even, coming ahead of the company’s Aug 16 annual results. Much was left unsaid — investors were left hanging by holding off on one of the company’s key jobs, chief of the Technology and Products division. Second round of senior appointments at the next level down is expected as soon as Aug 16.

Penn is clearly under enormous pressure to turn around a company now in a full-blown existential crisis with its copper network gone, the National Broadband Network on the march, competition amping up from smaller companies happy to take smaller margins, and with its biggest broadband competitor, TPG, rolling out yet another mobile network.

Much of the restructure is an unwinding of Penn’s prior initiatives that failed to halt the company’s long slide on the stock market, so it’s unsurprising that the market hasn’t moved much since the announcement of what many observers see as his last ditch chance to save his job.

The senior executive rejig was unusually bloody, with three of Penn’s direct reports including that his hand-picked chief financial officer, Warwick Bray, was shown the door. This would appear to signal a clash on the company’s restructure and strategy. Veteran Will Irving was left stranded, with his wholesale division folded into the new InfraCo, which will be captained by one-time IBM Services chief Brendon Riley. 

Also dumped were chief marketing officer Joe Pollard, another Penn appointment, and Stephen Elop, the former Nokia chief and senior Microsoft executive, who has been shifted out of his role as technology, innovation and strategy chief. Marketing will now be run out of each of Telstra’s handful of customer facing divisions as the company begins to deliver its promise of radically reducing and simplifying its customer plans. Elop was the senior executive most intimately involved in the restructure, Crikey understands.

Elop will return to North America having tidied up a lot of bits and pieces in Telstra’s technology group. Other US-based executives Penn brought in, including chief information officer Erez Yarkoni and his wife Charlotte Yarkoni, have quietly disappeared over the past 18 months or so as Elop cleaned house. Telstra said it is still hunting for a new CIO.

Strategy is now expected to sit under new chief executive officer Robyn Denholm, an Australian with decades of experience in Silicon Valley, including a decade-long stint as CFO of US-listed internet equipment maker Juniper Networks. Denholm joined Telstra in early 2017 as chief operating officer, a role that has also been axed.

The biggest surprise was the hiring of personable SBS chief Michael Ebeid to run the company’s market leading enterprise division, with the one-time Optus executive returning to the industry from broadcasting.

Much of the narrative around Ebeid has been about the $1 milion+ salary hike but he will be keen to make a run at the top job in an internal succession race Penn has set up, with Denholm, Riley and consumer chief Vicki Brady the leading contenders.

By making such radical changes, Penn has certainly bought himself time, but the urgency and the whiff of panic now around the company means that if no clear results have started to emerge by this time next year, after more than four years at the helm, the dogs will be baying loudly.

Peter Fray

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