Naturally Telstra’s chairman and chief executive were called upon by shareholders at yesterday’s AGM in Sydney to fight the federal government’s plans to force a break up of the company.
Media reports said chairman, Catherine Livingstone and CEO David Thodey took dozens of questions from shareholders at AGM on the break up, on former CEO, Sol Trujillo’s huge payout, and on that old bugbear, poor service.
Both maintained the company line, that they were negotiating and would come back to shareholders for approval.
They argued that remuneration is in line with industry standards, but incentive policies have since been tightened; and of course, customer service is paramount to the company, and is constantly being improved.
(So why do the complaints keep coming?)
But it’s the break up idea that is generating the heat. The current newish board and management should thank the federal government. Without the break up issue, shareholders might have gotten even more upset at Mr Trujillo’s multi million departure payout and by service questions.
A look at the 57 page transcript of the AGM shows the dominant issues.
Some shareholders were all bravado, calling for threats of High Court action (and if the High Court upholds the government and Telstra hasn’t negotiated a deal, what happens then?)
CEO, David Thodey maintained a construction line was important, as was good faith negotiating, and the need for shareholder involvement:
"We remain positively and constructively engaged with the Government on the issues of NBN; positively and constructively engaged, but I want to be very clear, we’re under no illusions about the challenges that we face and this company faces," he said in his speech.
"We are absolutely committed to acting in the best interest of our shareholders. While we are negotiating with the Government, the ACCC and NBN Co, we have shareholders at the forefront of our mind at everything we do.
"We all want certainty as we come out of this process. We want a solution that satisfies the disparate requirements of each of the stakeholders as we work through this and that at the end of the day we will have greater certainty about how we run this business going forward.
"It is critically important that we do that. Everything that we do must be in the interests of our shareholders and that will be the only thing that we do, and of course, customers and employees.
"This is an extremely complex negotiation as it covers so many different aspects of our business."
He added: "Can I promise that a mutually acceptable agreement will be reached? No.
"Do I think there is a pathway to such an agreement? Yes.
"What I can assure you is that the board and management will not agree to any proposals on the NBN … or separation … unless we are convinced that it will deliver fair value for you the shareholders of this company.
"In our submission on the bill ( to the Senate inquiry) we said that we opposed the bill in its current form. It is very important to be clear about this.
"While we do agree with the NBN vision, we do not agree with the bill in its current form. We believe that the legislation is unnecessary and not helpful at this time for very specific reasons.
"We are not opposed to the bill in its entirety. Of course we’d prefer it never to have happened, but now it is there, we have to take a position on the bill."
Mr Thodey reassured investors that whatever the outcome of its talks with the government, Telstra had the core asset to "win in the market".
Mr Thodey also emphasised the issue of customer service.
"Customer service is very important for us … and while we have many areas where we can improve … we are committed to making the necessary changes," he said.
The smartest move Telstra made yesterday was scrapping the absurd $2.20 administration fee for people paying their bills over the counter or by mail less than two months after it was introduced on September 14.
"We tried to impose this change without first listening to the people it would affect," Mr Thodey said.
That’s an understatement because Telstra spokespeople argued for it in numerous media situations (interviews on radio, TV and in newspapers). Now it’s gone.
"That is not consistent with my commitment to put customers at the heart of everything we do," Mr Thodey said.
But he said Telstra still wanted to encourage customers to use electronic payment methods.
"That being said, I still believe electronic payment is the right way to go … and we do intend to introduce some electronic-only plans in the future … it will be your choice if you want to use them," he said.
Mr Thodey also reiterated the company’s guidance to post low single digit growth in revenue, earnings before interest, tax, depreciation and amortisation (EBITDA) and EBIT in the current financial year.
Telstra shares rose one cent to $3.23, still in the same range as it was before the NBN/Separation proposal was made public.
And that is something to remember. The big money guys will sell Telstra if there’s a bad deal.
Some big shareholders don’t like it, but they are a minority and mostly linked to one or two groups of fund managers.
Most mainline analysts have holds on Telstra while they sensibly await the details of the deal the company and the government are trying to achieve.
