The Australian Telstra challenge

The new chief executive of Telstra - Australia's largest telephone operator - has his work cut out for him.

by The Economist
Last Updated: 23 Jul 2013

Currently making losses of about $23.2m a year, the state-owned company has to be prepared for eventual privatisation while still being hemmed in by regulations.

Sol Trujillo, a Mexican-American with plenty of experience in the industry, has moved fast to deal with the challenges. First, he has announced job cut plans amounting to 25 per cent of the company's staff. He also has plans to reduce red tape, as well as setting in place a round of new investment. 

Trujillo is concerned that the government will give competitors the right to piggy-back on a $3 billion broadband fibre network investment, an issue that he will need to fight. His big management lesson is the 'parasitic competition' that broke out in the US in the mid-90s when the Baby Bells had to open up their networks to competition. The result, Trujillo believes, was that few companies wanted to invest and there was a decline in America's broadband industry.

Source: Calling Canberra
The Economist May 13 2006
Review by Morice Mendoza

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