Down Under the gun:
By Al Lewis, Business Columnist
Friday, September 16, 2005
Former US West chief executive Sol Trujillo has been running Australia's largest phone company since July.
In less than three months, he has infuriated hordes of Australians - from the prime minister down. Telstra stock has fallen 15 percent, wiping out about $7 billion in market value. And now the company is under investigation by the Australian Securities and Investment Commission.
I've been getting phone calls from Australian newspaper reporters who want to know what's up with Trujillo. They wonder if there is some dark secret buried in the Rockies. I tell them there isn't.
Trujillo spent 26 years at what was arguably the worst Baby Bell in the United States. After he became US West's CEO, he sold the company to a guy named Joe Nacchio for some magic beans - that is, Qwest stock.
Other than that, I think Trujillo is a pretty nice guy (though I wasn't able to reach him in Australia). He walked away from the US West-Qwest merger with $71 million in cash and perks. Nobody seems to complain about this.
Everybody, including me, has blamed Nacchio, who single-handedly generated more ill will than anyone in the history of US Worst, while lording over the phone company's near collapse.
One of the first things Trujillo did as CEO of Telstra was give some of his friends high-paying jobs. This has apparently alienated other members of the Telstra team. And the Australian media have dubbed Trujillo's top executives "the three amigos."
Former US West executive Greg Winn is now Telstra's chief operating officer. Former US West executive Bill Stewart is Telstra's chief marketing head. Phil Burgess, who ran a US West-funded think tank in Denver called the Center for the New West, is in charge of Telstra's public policy and communications.
Trujillo and his amigos have been operating in a volatile political arena. And the Australian government, which essentially hired Trujillo, has been performing a delicate balancing act.
As the government prepares to sell its 51 percent stake in Telstra, it also wants to open Australia's telecommunications industry to competition, a move that will probably push Telstra stock lower. The company is valued at $42 billion.
Against this backdrop, Trujillo has been detailing Telstra's problems to the public and warning of an impending slide in revenues and profits, according to Australian media reports. He has also warned that proposed regulations will cost Telstra about $655 million a year.
His amigo Burgess told a reporter that he wouldn't recommend Telstra stock to his mother. That remark took more than $1 billion off Telstra's market cap.
Along with Trujillo's comments, Burgess' remark infuriated Prime Minister John Howard, who called Telstra's executives "disgraceful."
"If you have a senior position with the company, you have a general obligation not to talk against the interest of the company," Howard told Australian media.
ASIC, Australia's securities regulator, is investigating Telstra's compliance and disclosure practices.
It's also investigating Howard's comments, since the Australian government owns half of Telstra and Howard has suggested that Telstra executives should be talking the stock up, not down.
Burgess makes more than $500,000 a year. But The Daily Telegraph in Sydney reports that his public-policy gig isn't going so well, since government officials are loath to speak with him.
"Burgess has been gagged by Telstra," the newspaper wrote. "He has become too controversial."
Australian Sen. Barnaby Joyce had this to say to a TV reporter: "It obviously looks like these guys have grabbed a beer and a burger and jumped on a plane and come over, and had really no idea about the legislative environment that they're coming to."
Australia's plan to move its telecommunications industry from a regulated monopoly to free-market competition is going to be a complex transition. It's been billed as the world's biggest stock sale. And it will require deft hands.
So it's Sol Trujillo and his three US West amigos to the rescue?
Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Lewis at denverpostbloghouse.com/lewis, 303-820-1967, or firstname.lastname@example.org.