Trujillo hits back at Telstra critics
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Australia is bucking the worldwide trend by seeking to increase the regulation of its major telecoms companies, Sol Trujillo, Telstra chief executive, claimed on Tuesday.
In an exclusive interview with the FT, Mr Trujillo, who took over four months ago, said that while authorities in the US and Europe had lessened bureaucracy to promote competition, Australia’s competition commission was poised to do the opposite. “This attitude appears unique to Australia,” he said.
US-born Mr Trujillo, a former chief executive of US West and Orange, the European-based telecoms company, has had a turbulent ride since he took over as head of Telstra.
The company is embroiled in a fierce row with the competition regulator and government over what regulations it will be subject to when the government sells its remaining 51.8 per cent stake late next year. Mr Trujillo has been accused by critics of misreading the Australian political mood and allowing his executives to pick fights with politicians, a claim he denies.
A Mexican-American, he has also had run-ins with the local media, criticising their constant references to him and his recently-recruited senior team as “amigos”.
“Clearly, if those kinds of comments were made in the US or Europe, they would not be acceptable. Yet it may be the norm here. I don’t know. I haven’t lived in this culture for a long time.”
Telstra stock was previously sold to investors in two tranches in the late 1990s, though foreign institutions only hold 6 per cent of the shares.
The government has maintained a cap allowing foreign investors to hold up to 35 per cent, although Mr Trujillo on Tuesday signalled that he anticipated a limited role for the company with regards to marketing the stock to overseas institutions. “I am indifferent to shareholders in terms of geography. I believe that Telstra should be privately owned. If the mix is 90/10 or 70/30, that is for the market to sort out.”
The comments will disappoint the government which has made selling stock to overseas investors a high priority.
Domestic demand for “T3” is expected to be cooler than for previous tranches as retail shareholders are nursing heavy losses, especially on T2, which was sold for A$7.40. The shares closed last night at A$4.02.
However, Mr Trujillo said fund managers around the world would be attracted by Telstra’s new strategy and focus on growing value. “I can’t predict what the regulations will be. But we can and will take out costs, deploy wireless networks, innovate and change the business’ economic model.”
Mr Trujillo denied that his relations with government had been fractured by weeks of bitter rows. “I think we are in continuous discussion with them.”
However, observers on Tuesday said Mr Trujillo and his team were barely on speaking terms with ministers and claimed that relations between the camps “were about as bad as it gets”.
Mr Trujillo insisted that he would see through the company’s restructuring, regardless of the regulatory outcome.
“I am here to do a transformation and I will be here as long as I need to be to do that. It’s probably a 3 to 5 year turnround. If we could do it sooner I think we would shock the world. The timeframes that we are working to are more aggressive that at any telecoms company around the world.”
He said he did not believe that his reputation as a leader had been damaged by the controversies which have blown up since his arrival in July.
“I have not insulted anybody. When you are making a transformation, you don’t make change quietly.”
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