Telstra, After Changing Their Plans, Is It Time To Dump Andy Penn?
‘We’ve changed our plans’ Telstra claimed recently as they desperately tried to stop consumers dumping the expensive carrier, however some are now saying that after a 40 per cent collapse in its full-year profit the Company should be looking to change their CEO.
After sacking 10,000 employees Andy Penn the CEO of Telstra brazenly announced yesterday that his pay packet has not been affected, to the contrary he was handed a 34% increase in salary from $4.56 million in 2018 to $5.12 million in 2019 this was despite sharp falls in profits and dividends at the under siege telco.
Currently Penn is fighting battles on several fronts, on one hand he is trying to get the NBN to cut their wholesale broadband rates but does not want to see a cut in the billions that NBN are currently paying Telstra for access to their ducts.
His fight with the NBN appears to opportunistic as it has allowed him to deflect the attention away from Telstra’s core business that is under siege.
18 months ago, Telstra said they were set to be a major player in the ‘health’ and ‘Connected Home’ markets, that has not happened nor is it ever likely to happen.
In the past they also attempted to be a player in the B2B market cuddling up to Microsoft to deliver Office 365 and a host of offer cloud-based services. This business is also struggling due in part to businesses buying their services either direct or bundled in with other services.
In the mobile space JB Hi Fi who while they are a Telstra reseller are stripping handset sales away from a direct Telstra sell while at the same time archrivals Optus and Vodafone are forcing Telstra to deliver cheaper and less profitable packages.
Another problem for Penn is 5G.
He has led a strategy of going out early in the 5G race, but the only problem is that the carrier has failed to deliver real world 5G speeds over 400Mbps despite senior Telstra executives including Penn bragging of speeds over 1000Mbps.
The other big issue is why should a consumer pay a premium price for a 5G handset and steep Telstra 5G data package when there is no real difference between the cheaper 4G and 5G services other than a few seconds. Netflix and Foxtel can be watched with no stutter vision at sub 20Mbps, so the big question is why consumers should switch.
The big question now is whether Penn is the right guy to lead Telstra whose marketing is dull and boring and dreadfully predicable.
His big pay bump which has upset Telstra Unions and their members comes just a year after shareholders revolted over executive pay, handing the telco a ‘first strike’ vote over the bonuses paid to Mr Penn and his senior management team several who have already been sacked to make way for Penn’s big salary pay rise.
Telco union CEPU state secretary Shane Murphy said the pay rise was a “disgrace”.
“The union is absolutely appalled … while under his watch 9500 jobs have been axed, the company is losing 40 per cent in profit, and workers are being offered meagre pay rises of up to 1.8 per cent or 2 per cent,” he said.
“Not to mention that customers across Australia continue to be let down as Telstra struggles to resource the network with fewer and fewer staff – all while Penn takes home $5 million dollars.
During the past year many senior executives have changed roles however no voluntary information has not been provided for other senior executives some who are believed to have been forced to forego pay rises.
Currently Penn is banking on his Telstra 2022 or T22, to turn around the fortunes of the carrier who is set to face new competition shortly from overseas providers.
His latest plan included simplifying the telco’s internet and mobile plans using the slogan ‘We’ve changed our plans’ the creation of an InfraCo division to handle infrastructure and cost reductions which includes the selling of Telstra owned properties.
The telco has reportedly sold a $700 million stake to investors led by Charter Hall, with the telco retaining a 51% stake (~$1.43 billion value) in the property trust.
Today Telstra shares are down to $3.84 a fall of 2% after hitting multi-year lows. The stock has gained about 40 per cent from $2.89 this time a year ago, to as high as $3.99 last month.
The telco’s share price peaked at $6.59 in February 2015.