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Summary:

US telecom companies, big and small, have been wheezing, desperate to get out of a slump that followed the bursting of the bubble. Look at Lucent – a company that nearly invented the industry is now competing with Chinese upstarts. AT&T, gone, part of SBC. Many […]

US telecom companies, big and small, have been wheezing, desperate to get out of a slump that followed the bursting of the bubble. Look at Lucent – a company that nearly invented the industry is now competing with Chinese upstarts. AT&T, gone, part of SBC. Many fell victim of less than stellar management, others to hype, and some simply could not keep up with times. Still, those who trolled their executive corridors are much in demand globally. Vodafone hired Arun Sarin, a former Pac Bell and AirTouch executive as its CEO. European wireless carrier Orange hired Sanjiv Ahuja, an alumni of Telcordia Technologies to be its CEO. And now Telstra, the Aussie-incumbent has hired Sol Trujillo, former chief executive of US West (unceremoniously dumped by Broadbandit, Joe Nacchio) to be its new chief executive.

Trujillo will take up his position on 1 July 2005. He will replace Dr Ziggy Switkowski, who will step down on 1 July 2005. The 53-year-old former Bell-head and his wife Corine, will be moving to Australia from California to take up the role. “We have to migrate to IP .. I wish it were simpler but it is not,” he told Sydney Morning Herald.

Telstra’s culture will change. Customers must come first, Trujillo said. Internal bureaucracies, political theories, executive rivalries, or even the regulators will be challenged. “You try to eliminate things that are not adding value to customers.” Incidentally Ahuja took over as CEO from Trujillo at Orange SA. My theory on US telecom executives snagging big jobs overseas is that they have experience in dealing with slow-growing mature businesses, handling the financial markets, and more than anything deal with the regulators to massage policy in their favor. Those are vital skill sets when every operator – wireline and wireless – is walking in each other’s front yard.

  1. Mr. Trujillo is in for a rude awakening if he thinks he’s going to come to Australia and challenge the regulatory bodies “because it doesn’t add value to customers” which is code for “it hurts our bottome line.” Mr Trujillo is taking charge of the largest company in Australia, 51% owned by the Federal Government. The Federal Government is made up of a coalition representing slight right of centre city dwellers and the rural farming community. If you understand point one about about Australia it is that the rural farming community’s interests are over compensated for in comparison to their actual numbers.

    The rural community do not want Telstra to be privatised, the Federal Government is banking on it (to the tune of AUD$50b) and to get that sale over the line, Telstra will be required to provide certain services and future services as deemed appropriate by the federal regulator to rural communities even if it must do so at a loss. Telstra had a monopoly for a long time and this is their obligation to stakeholders, shareholder be advised.

    So, I wish Mr Trujillo the best of luck, but he’s on a slippery slope to failure-ville if he thinks he’s going to win any battles on the regulatory front here in Australia. His priorities must be to remain focussed on providing a new generation of infrastructure for next generation services like IPTV, making the customer the centre of Telstra’s attention (most business customers loathe Telstra because its their way or no way) and cease the erosion of their corporate client base. Mr Trujillo has an amazing list of assets and advantages at his disposal so if he’s half way decent, he should do very well. If he gets lost in the politics and regulatory quagmire of Australian telecommunications, then he’s dead in the water.

    He also must steer clear of non-core investments which was the undoing of his predecessor – with the profits that Telstra make it is very easy to lose focus. He must clean up his management team, there is alot of dead weight. Finally, he has to realise that Australia is not the US, its a unique beast that often times is more cumbersome to navigate.

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  2. Jesse Kopelman Wednesday, June 15, 2005

    While I agree that what works in America will not automatically work in AU, some of the issues are identical. In the US we also have an over-represented minority of farmers. There are still many laws on the books that give them all kinds of preferential treatment. One area where they are not heard very loudly on is telecom, however. This is thanks to the incumbants spending the last 20 years and maybe more than number of billions of doolars to make sure that no one speaks louder then them in Washington DC. I’m sure the AU government is just as suceptible to the power of big money lobbying as any other government. If there is one thing big time US execs know how to do, it is that.

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  3. See the difference is, Telstra is owned by the government and it wants to sell it. The first 49% of Telstra was sold to the public via request for shares forms that people could fill out and send in. I can imagine the final 51% will in all likelihood be the same because T1 and T2 were massively oversubscribed. So, there are no big money lobbyists backing Telstra to be de-regulated.

    Also, the government has a majority in both houses and their upper house majority is with the help of the party who’s sole constituents are rural agricultural interests. Telstra will be sold and it will be absolutely shackled with regulation and even legislation ensuring that “the bush” (rural Australia) is well taken care of moving forward even if Telstra has to do it at a loss.

    If Sol Trajillo comes to Australia with the intention of challening that then he’s naive. Frank Blount, the previous CEO before Ziggy was also an American and he was very clever, he steered well clear of politics and the regulation arguments in Australia and delivered great results. Sol, would be best informed to find out what his limitations are and just work around it.

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  4. It will be interesting to see how the change of management (the new guy will surely bring in trusted executives) impacts their dominant market share in some of the more highly contended services like Internet access and managed services. The Wiki on Telstra now carries accurate market share reporting for the company in these areas:

    http://en.wikipedia.org/wiki/Telstra#Market_Position_.26_Power

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