FYI | May 10 2006
By Greg Peel
Sol Trujillo didn’t make a great impression on Australia when he rode in astride his mule and sporting a colourful poncho with matching sombrero mid 2005. Not that Australians had any reason to question the man’s ability, nor even his character, but the bottom line is the average Australian can be pretty suspicious of high-flying Americans heading downunder to teach an upstart satellite a thing or two about how to run a business.
The job of running Telstra – the region’s biggest telcos, and a significant proportion of the Australian market’s capitalisation – should have gone to a local, as far as many were concerned. Nevertheless, an extensive global search was carried out in the increasing globalised world and Sol was The Man. John Howard gave his approval.
It didn’t help perceptions when Sol quickly put the broom through upper management. Not that this in itself was anything sinister, more so it is the right or even the obligation of a new CEO. As wise man once told me the first thing you should do when taking over a new management role is sack someone – anyone – and that’ll keep the rest of the staff on their toes. But the problem was Sol then filled out the new positions with more Americans.
The first accusations of favouritism and helping out your mates were then levelled by media possibly hoping such an opportunity would arise. With a large slice of Australia either directly or indirectly shareholders of Telstra, it made for popular copy.
But Sol rode over it all, and within a very short space of time by anyone’s standards released the big, new, shiny Telstra strategy – a strategy that would take the lumbering behemoth into the twenty-first century and maximise returns for its shareholders, ie Australia.
Now the accusations of favouritism have resurfaced, and Fairfax’s Australian Financial Review has relaunched the missiles. This time it’s over questionable tender wins by companies with which Sol has previously been associated. Telstra has not laughed off the attack on this occasion, but has spat the dummy and fired back.
To set the scene in the sandpit, Crickey.com reminds us that a battle had previously raged over the shiniest Tonka truck on offer – the Trading Post. As a company reliant on classified adverting, and facing potential undermining from the growth of the internet, Fairfax was dead keen to get its hands on this bastion of buying and selling amongst middle Australia. Fairfax came out bruised and bloodied when Telstra’s Sensis won the fight.
If you can’t beat them join them, so Fairfax’s next move was an attempt to merge with Sensis. This failed as well. The salt was rubbed in when Sol came along and lauded Sensis as the keystone of a new Telstra. Fairfax was forced to sulk back in its corner.
So has Fairfax had it in for Telstra ever since? Absolutely, if you believe Rod Bruem, Telstra company spokesman since 2000 and editor of the nowwearetalking website. Bruem has used this blog – a Telstra-specific forum – to respond to the recent accusations put forward by the AFR, and as a staging post for the counter attack.
The original salvo came in a lengthy article published by the AFR last Friday and penned by journo Pam Williams. To cut a long story short, Williams suggested that recent tenders for major Telstra deals, including the $3.4bn FTTN contract handed out to Alcatel, smacked once again of favouritism and that Telstra’s once competitive and transparent tender process was a thing of the past under Sol’s regime. Sol was previously a member of Alcatel’s chairman’s council.
This brought back references to previous favouritism charges, and to top it off Williams extracted criticisms of the new tender process from disgruntled Telstra managers (unnamed for fear of losing their jobs).
The counter attack came in the form of "pot calling kettle", or "people in glass houses". Firstly Bruem aired his suspicions that while Williams might have had the by-line on the article, higher powers at Fairfax were calling the tune. All a case of sour grapes over the Trading Post and Sensis, supposedly.
Secondly, Bruem fired off a bit of a "please explain" email of his own, asking Fairfax to respond to various questions of favouritism in regards to staff appointments by CEO David Kirk and AFR editor Grant Burge, as well as tender processes for the likes of newsprint provision. Bruem basically decided two could play at this game.
Bruem received a response alright, one that said "This is one of the most astonishing emails I have received in my corporate career, and I won’t be responding anytime soon. Very best, Bruce". Bruce Wolpe is Fairfax’s head of corporate affairs.
Bruem’s blog also outlined a lengthy rebuttal to the original AFR claims. Tenders are offered only to companies Telstra feels can do a good job. Time and money is not wasted in the process. For a long time Telstra has chosen only two companies to compete. Part of a fast and dramatic transformation of the company. Unnamed critics from within the company have the right to their views, but will not discourage management etc etc.
You wouldn’t expect anything different from a Telstra-backed blog. But how much can you trust the editorial independence of the AFR? And how much, of all of it, is indeed true? Is Sol guilty of favouritism? Should Fairfax pull the log from its own eye? Something tells me the bell hasn’t gone in the sandpit quite yet.