“It’s a shocker”: Telstra board faces shareholders


Telstra’s board and senior management today faced down a series of shareholders angry about the company’s dwindling share price, with one accusing the beleaguered telco of having suffered “ten years of failure” in terms of its management and another branding the situation “a shocker”.

The company’s share price is currently languishing around the $2.60 mark, close to its 52-week low of $2.55 and close to its all-time low since it was listed in 1997. The company’s share price has steadily declined since the turn of the decade in 2000, when it was above $9.

“The main objective of the board is to make a profit for shareholders. Unfortunately at Telstra you’ve had ten years of failure,” shareholder Peter Pollis of Coogee, NSW told the board at the AGM during question time. “On page 33 of the annual report it says your duty is to protect shareholder value. You have failed.”

Long-time shareholder Sydney Lawrence (pictured above with his new Telstra T-Touch Tab) welcomed what he described as “the glowing self-introduction” of Telstra’s individual board members earlier in the day, as well as the speeches of Telstra chairman Catherine Livingstone and executives David Thodey and John Stanhope.

However, said Lawrence, all the speeches didn’t amount to a can of beans. The shareholder advised Telstra to look to its share price. “We don’t need to say any more,” he said. “With the Telstra share price going towards $2, will the board accept that they must do their job, which is to increase shareholder finances — or will they admit they have failed in their duty and resign?”

Steve Bookavalis from Yarraville told Telstra’s board its performance was “a shocker”.

He said both St George Bank and Qantas had been “up for sale” over the past few years and asked why Telstra didn’t consider buying the companies to increase profits. “Telstra as a company has a massive problem. I know what the problem is, and I know what the solution is — and I’m sure the directors don’t know what the solution is,” he said. “The problem is a lack of ambition. It’s time Telstra became a multinational company. Directors, grow up — have some ambition for the shareholders.”

“Telstra’s in big, big trouble as a company.”

Pollis said he had a “three point plan” which could add $10 billion to $15 billion to Telstra’s value, which he had articulated on the “blog” of economics commentator Ross Greenwood. “Unfortunately, youse have a view that every Telstra shareholder wants a dividend,” said Bookavalis, claiming that what shareholders wanted was in fact to avoid capital loss.

Other Telstra shareholders pinioned the company on customer service issues, despite the fact that Livingstone had specifically asked that those issues be addressed by customer service staff.

“I’m a reluctant customer of Telstra,” said one Robert Dowling from Eaglemont. “The majority of people here, I would bet, have got their own disaster stories. Why does it take a financial disaster in the company to make it realise that customers are what drives the business?”

Livingstone and Thodey responded to the shareholder complaints in a firm but polite manner.

“We are not diversifying into airlines or banks,” Livingstone told Bookavalis. However, the chairman noted Telstra was finding new sources of revenue — such as mobile broadband — to offset declines. “We are very ambitious for Telstra,” she said.

And then, to Sydney Lawrence: “The board is very concerned about the share price.” Livingstone noted that part of the share price problem was related to the gradual sell-down by the Future Fund of its stake in the company. “There is nothing we can do about the Future Fund strategy,” she said.

Thodey pledged to look into many of the customer service issues personally but warned it would take time to make systemic change. “This is not just a quick fix, you need to re-engineer many aspects of the business,” he said.

Image credit: Sydney Lawrence.


  1. When the CEO talks about needing to re-engineer many aspects of the business in order to just deliver good customer service, you know the org has a problem.

    • I think the problem is that Telstra is incredibly complex and has grown so necessarily over the years. But now the time has come for simplification.

  2. Is the proposed structural separation of Telstra likely to be a good or bad thing for Telstra shareholders? Is that part of the current argument against it? I feel stupid asking but I’m not at all familiar with the impact this type of thing would have.

  3. Renai one thing that is food for thought to come out of the Telstra AGM was the fact that the Future Fund voted AGAINST all Telstra proposals.

    Will the Future Fund continue this anti Telstra Board stance and try to block the Telstra and NBN Co Heads of Agreement when, and if, it is called for a shareholder vote next year.

    I do think that Telstra, the Government and the NBN Co are agreed to roll-out the NBN under the present Agreement but would the Future Fund destroy this Agreement?

  4. Telstra has to both satisfy the shareholders need for return and the ability to make money.

    My fear is that to maximise shareholder returns, more support staff will get shafted and quality will decrease.

    Yay capitalism!

  5. Telstra has a political problem. It was created by conservative politicians for their benefit so sadly can only be fixed by politicians, and we know their record of implementing anything without the political outcome being the first consideration.

    It was sold to the public because John Howard and Peter Costello wanted to get their hands on the $65,000,000,000 proceeds and continue the “sound economic managers” mantra when they were anything but. They had a problem with the National Party so appointed Don McGauchie from the NFF to the board to grease the wheels.

    This guy has form, organizing dogs and balaclava clad thugs to take on the maritime workers for example. Another role he had was on the board of James Hardie, that magnificent Australian company that tried to rearrange its affairs to avoid responsibility for the fact that its asbestos products are killing thousands of people.

    McGauchie wasn’t the only James Hardie director to spend time on the Telstra Board. The gene pool for board members in Australia is small. Board members from the gouging banks also served with Telstra. The company was considered a cash cow and was managed as such. How much real concern for customers would people like this really have?

    McGauchie ended up Chairman and needed a new CEO and personally selected a like minded chap named Solomon Trujillo. Sol promptly appointed some more carpet bagging spivs from the US to help him rape and plunder the company. As but one example Brightstar is sole supplier of mobile products to Telstra. Use google to find out about the spivs connections to this company and how they went around the board to set up the deal.

    Telstra’s copper network is on average 60 years old and stuffed. Telstra does not have the capital to replace it, and even if it could, why spend billions reinstalling 60 year old technology.

    NBN is the only solution. Australia needs a new network built by anyone but Telstra. Telstra can become a very successful retailer once no longer saddled with the conflict of interest in trying to supply wholesale networks to their competitors on expensive ancient technology. All we need is for the creators of the problem to get out of the way.

    • Excellent post. In fact one of the most informative and knowledgable arguments I’ve read in some time. I agree with you 100%.

  6. NBN is going to be Telstra all over again: a government owned monopoly, eventually turning into a semi-government-owned monopoly, not responsive to its customers or to its shareholders or to voters. The worst of both the government and corporat eworlds.

  7. The mantra in Australia that Government Owned always means inefficient, unresponsive etc. is a little tiring. There are many examples of organisations which operate effectively with government control and many examples of the opposite in private hands. The banks are an example of the latter and Australia Post the former. Look at overseas experience. The old Telecom Authority in Sweden (Televerket now Telia) ran a highly efficient network with among the lowest prices in the world. It also was one of the companies which pushed the development of mobile telephony through the analogue NMT system in the 80s.
    The problem for Telstra is that they have multiple layers of systems designed to entrench their competitive advantage of owning the access network. As a result Telstra have been totally absent in all ‘Open Access’ markets including NBN Tas. This is costing them lots of customers! I believe their only hope is to build a skunkworks unit which will just feed customers into their core networks. This needs to be done yesterday. I don’t think the management of Telstra as it is is up to this, but they have a stop on employment, so they’re stuck with all these people with the wrong mindset. This is very worrying. Australia needs Telstra to function well and profitably throughout the transition.

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