Thursday, 31 March 2022 07:15

Appointment of Brady as Telstra CEO indicates 'steady as she goes' policy Featured

Vicki Brady will head Australia's biggest telco. Vicki Brady will head Australia's biggest telco. Courtesy Sky News

Telstra's announcement on Wednesday that chief financial officer Vicki Brady would replace chief executive Andrew Penn indicates that there will be no changes to the company's direction in the near future, independent telecommunications consultant Paul Budde says.

Commenting on the new appointment, Budde said that there had been no visible signs that Penn was about to go, but Telstra would probably have been working on the change for a while.

Brady's appointment means that women now head the two big telecommunications firms in Australia; Optus is led by Kelly Bayer Rosmarin who was appointed in December 2019.

"Telstra is really good at organising smooth internal CEO successions," Budde said. "They have a excellent pool of talented C level people and there is no longer the ego element that, for example, played a key role in Telstra’s leadership with Sol Trujillo in the mid-00s."

Trujillo was appointed as Telstra chief in 2005 and lasted until 2009 when he was replaced by David Thodey.

Budde said Penn was a person with financial nous and a realist. "He concentrated on what Telstra was, rather than what it could be. If we look at the massive investment failures of the company in the period 1990 – 2005, then we could classify that period as one where Telstra wanted to be another company," he noted.

"It was also seen by the investors as a potential new tech company on par with the digital giants that started to emerge at that time. Most of those investments, based on that vision, failed."

He said Penn saw Telstra for what it was: "a telecommunications company that, of course, had to modernise itself with all of the new IT technologies, but a company that remained a telco."

Due to competition from big digital firms like Google, Facebook and Amazon, Telstra needed to become leaner and meaner, and that meant it had to focus on costs, Budde said.

"The new players all can deliver new digital services at a fraction of the costs of the telcos and, in order to survive, telcos around the world have to reduce their costs very significantly.

"A successful strategy to make that happen within Telstra was established by Penn and this cost transformation is still continuing.

"As the company’s CFO, Brady has been instrumental in this process and under her leadership this process will, no doubt, continue.

"She already has five years’ experience within Telstra and before that she also worked for other telcos so she is well up-to-date with the challenges and opportunities of these companies."

One headache that Brady would have to deal with - as Penn also experienced - was "the increased monopolist behaviour of the state wholesale provider NBN Co", Budde said.

"The high wholesale costs that such a company can abstract from the market has led to ever-dwindling retail margins. The recent government handout of $480 million to NBN Co for regional services is a good example of this," he added.

"This handout will further undermine the possibilities for the telcos to compete with NBN Co in regional and rural Australia.

"With shrinking retail margins, the internal telco competition will also continue to further heat up, with Optus and TPG both facing the same problem. So, Brady has plenty of work to do.".

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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