TELSTRA ARTICLES
The following message for all staff is from Ziggy Switkowski, Chief Executive Officer.
I am pleased to announce today the next stage in the redefinition of the portfolios within Telstra as we continue to align our resources and organisation with the strategic priorities of the company.
Over the past year you, and Telstra, have achieved many important milestones. We've dramatically enhanced our internet and online presence, we've grown strongly in the mobiles market, we've positioned ourselves robustly in newly competitive segments, and we've delivered to our customers a steady stream of attractive products, services and pricing plans.
As with all journeys, we have to keep adjusting in order to stay on track. Today, I am announcing changes to our organisation structure which will make some of these adjustments.
These changes will see us continue towards our goal of becoming a globally significant, modern, successful communications company. In making them, I have had at the forefront of my mind the following priorities:
achieving strong revenue growth by offering customers innovative, relevant communications products and services in a timely and cost effective way;
continuously improving the delivery of services to all Australians thereby increasing customer satisfaction, reducing churn and improving service levels;
delivering levels of profitability and cash flow to enable appropriate levels of investment in world class infrastructure, the payment of attractive dividends to shareholders and increasing shareholder value; and
environment that is competitive and productive, customer focused, empowered, using best-in-class processes.
Our strategy anticipates a Telstra as the carrier of choice for telephony products; with a world class, national, internet-ready fixed and wireless infrastructure; an increasing proportion of non-traditional communications revenues reflecting the global digital revolution; error free delivery of service; and a growing set of businesses in Asia.
It anticipates a Telstra which is a rewarding yet challenging place to work, one characterised by the satisfaction of delivering to customers great solutions and impeccable service, and by the buzz of winning in a competitive market through innovation and new business development.
It requires a competitive cost base, modern technology and great people. It values speed to market, commitment to growth and customer service, as the defining qualities of enduring success in the decade ahead.
These criteria are reflected in the changes being announced today.
Infrastructure Services - Gerry Moriarty
A new unit, Infrastructure Services, is being formed with Gerry Moriarty as its Group Managing Director (GMD). This group will comprise the existing Network and Technology Group (NTG) to which will be added all Access Field Services and the Olympic Unit.
This represents a consolidation of field operations from Telstra Business Solutions (TBS) and Commercial & Consumer (C&C) together with NTG and is intended to lead to improved service performance across the nation, at progressively lower costs. The Infrastructure Services group will also have responsibility for Telstra's involvement in the Olympic Games.
Excluding Network Design and Construction, which is being prepared for divestment later this year, this group will initially contain approximately 25,000 Telstra people.
Retail Services - Ted Pretty
A Retail Services group is also being formed with Ted Pretty as its GMD. This group is made up of the current C&C, TBS and Convergent Business groups, minus the field operations.
In taking this step, I anticipate an improvement in meeting the needs of customers who have traditionally fallen between these units; more creative customer solutions; faster commercialisation of more relevant new products and services; a greater focus on bringing our customers with us in the online journey; and more coherent introduction of new economy products in all of our customer segments.
The Retail Services group will be responsible for more than 70 per cent of the company's revenues.
These are evolutionary changes. The net effect is that the roles previously carried out by GMDs Peter Shore and Lindsay Yelland have not been replaced and, instead, have been integrated into larger units with mandates to improve service, better meet customer needs, and fix demarcation issues.
We have decided not to separate our internet related activities into a product line of business or company. The future of retail services is inextricably linked with internet related products and services and as such they remain with Retail Services. At least for the moment, we believe we can achieve adequate separation of business focus in the content and application space by our strategy of creating subsidiaries, joint ventures and investments such as Pacific Access, Advantra, IBM-GSA, Foxtel, PCCW, Solution 6, etc.
Both Gerry and Ted will bring their well known strengths to help lead us forward - creativity, customer focus, different ways of thinking. These characteristics will be combined with, and reinforced by, strong support from our senior team and others around them.
OnAir
Our mobile retail sales and after sales support responsibility will continue in OnAir headed by Dick Simpson but importantly he will now control investment in wireless network and associated systems.
Wholesale & International and corporate functions
The GMD of Wholesale & International, Doug Campbell will remain in his current position. Finance & Administration will continue to be lead by Paul Rizzo and Legal & Regulatory by Bruce Akhurst and Employee Relations by Rob Cartwright.
Graeme Ward, GMD of Public Affairs & Corporate Marketing has announced his retirement and consideration is now being given to the best organisational structure for this group.
A concluding round of changes is scheduled for later this month as we finalise the details concerning our new regional unit.
And finally you have my commitment that we will be working closely as one team to make sure Telstra succeeds in its important work and mission.
Thank you.
Ziggy Switkowski Chief Executive Officer
At 1st September 1998 Directors:
Dr Zygmunt (Ziggy) Switkowski 50 CEO from 1st Mar 1999 David Hoare Chairman 65 (BT Pioneer Dec95/2y retired late 1999) Bob Mansfield 48 (PM Office, Optus, McDonalds, Fairfax) John Ralph D/Chair 65 (Fosters, Pac Dunlop) Oct96/4y Ross Adler 53 (Santos CBA) Oct96/4y Anthony Clark 59 (KPMG) Oct96/4y M Codd 58 (ISSC, Qantas, MLC, IBM) Feb97/4y Elizabeth Nosworthy 52 (Freehills David Jones, Bris Port) Dec96/3y Christopher Roberts 53 (MD Arnotts) Dec96/3y Malcolm Irving 67 (Caltex AIDC) Jul97/3y John Stocker 53 Oct96/4y Stephen Vizard 42 Oct96/4y Donald McGauchie Sep98/? Mrs Celie Moar (farmer) Sep98/?
HISTORY OF DIRECTORS
At 1st March 1996
Directors: D Hoare (BT Pioneer)(Dec 95 reappointed for 2y
but stayed till Nov 1999)
A Morokoff, M Codd (Director ISSC & Qantas), T Finn (former
chairman IBM), W Mansfield (ACTU), E Nosworthy (Freehill,
Hollingdale & Page Solicitors), P Redlich (Holding Redlich
Solicitors), C Roberts (MD Arnotts), R Tsenin (MD Goldman Sachs
Aus), M Williams, S Wilson (MD Wilson HTM), J Menadue,
F Blount.
Mark Burrows (BT Aus, Comalco, Pioneer) appointed D/Chair for 5y).
Frank Blount CEO 60 appointed in 1992. Formerly with AT&T. retired March 1999.
The Liberal replacements are Steve Vizard (entertainer/CRA lawyer), John Ralph (Pratt Industries, Fosters Brewing) is new deputy chairman, John Stocker (former head CSIRO), Anthony Clark (Santos) and Ross Adler (KPMG). The others on the Board now are: F Blount, D Hoare, E Nosworthy, C Roberts and M Codd.
The mass sackings follow the most successful year ever for Telstra. The very good results embarrassed the Liberals who want to sell Telstra. The new Board is expected to soon come to the conclusion that the best thing for Telstra will be a sale.
Alan Ramsey in the SMH this week said it all.
"Then, on Saturday, just 24 hours before Howard at last put an end to the election speculation farce, the Government did some last-minute repayment of political debts. Donald McGauchie, the former president of the NFF and one of the Givernment's most strident and involved allies in its assault on native title and waterfront unionism, was appointed to the Board of Telstra."
It will be interesting to see which internal faction emerges as dominant. Ziggy is new to Telstra and has no track record with Optus. The ultra right wing group is still pursuing a fierce anti union agenda while the traditional Telstra group are trying to run a phone company. The "resignations" at the top in the next few months will give us a answer. It doesn't take a rocket scientist to see the problem, but it may take one to fix it!
(Background: On 30th April 96, Optus announced that was the new CEO. He is an Australian, a nuclear physicist and was chairman and MD of Kodak (Australia). Ziggy was credited with the rescue of Kodak. Kodak was almost a basket case but the Labor Federal Government offered incentives. Kodak is now a successful exporter of film. On 13 June 97, Switkowski "resigned". The papers reported that his severance payment was a mere $4.85m. Accounts later showed that it was around $3.5m.)
Zygmunt (Ziggy) Edward Switkowski - a lifetime of leadership
Educated at: St Bernards Collage
Essendon: University of Melbourne
Qualifications: B.Science (Hons), 1968. Ph.D (Nuclear Physics), University of Melbourne, 1973 Harvard Business School, Advanced Management Program, 1993
Spouse: Jadzia
Children: Clare and Mark
Only one third of Telstra shares are available for trade.
As at float:
Australian Government 66.66% Telstra Employees 1.40% Broker Clients 5.03% Foreign 6.33% Aus Institutions 7.00% Public 13.75%Largest Shareholders at float AMP Investments 102.4m Axiom Funds Management 71.9m BT Funds Management 52.4m Bank of Ireland 39.7m Lend Lease 37.1m Maple Brown Abbott 33.2m Portfolio Partners 29.0m Bankers Trust 28.0m Queensland Investment Corp 27.3m LGT Asset Management 18.0m
20 LARGEST SHAREHOLDERS
28-8-98 13-8-99
(rank/m shares/%) m % m %
Aus Government 8578 66.7 8578 66.7
Westpac 1 350 8.1 1 347 8.1
Chase Manhattan 2 230 5.4 2 296 6.9
National Nominees 3 182 4.3 3 246 5.7
Telstra ESOP 4 135 3.2 4 110 2.6
BT Custodial Serv 8 67 1.6 5 100 2.3
Permanent Trustee 5 106 2.5 6 89 2.1
ANZ Nominees 9 65 1.5 7 84 1.9
AMP Life 6 92 2.1 8 77 1.9
Qld Investment Co 7 67 1.6 9 67 1.6
Citicorp 10 62 1.4 10 63 1.5
Cth Custodial Ser 12 55 1.3 11 42 1.0
MLC 11 59 1.4 12 40 0.9
Perpetual Trust V 15 37 0.9 13 39 0.9
Permanent Trustee 14 41 1.0 14 35 0.8
HKBA Nominees 17 29 0.7 15 30 0.7
Perpetual Trustee 16 35 0.8 16 25 0.6
NRMA 19 23 0.5 17 23 0.5
National Mutual 20 21 0.5 18 20 0.5
Mercantile Mutual -- 19 19 0.5
AMP Nominees -- 20 18 0.4
SAS Trustee 13 43 1.0 --
Perpetual Nominee 18 27 0.6 --
DIRECTORS SHARE HOLDINGS
Share holdings of Directors, both direct and indirect.
26-8-98 26-8-99
Hoare 27,720 27,720
Ralph 40,600 40,600
Blount 12,700
Switkowski 67,120
Adler 50,000 50,000
Clark 48,000 48,000
Codd 8,000 8,000
Irving 16.000 16.000
McGauchie 2,200
Moar 2,200
Nosworthy 16,600 16,600
Roberts 46,360 46,360
Stocker 32,480 32,480
Vizard 16,000 16,000
Payments to Directors
98-99
Hoare $124495
Ralph $ 74707
Adler $ 53500
Clark $ 53500
Codd $ 53500
Irving $ 53500
McGauchie $ 43469
Moar $ 43469
Nosworthy $ 53500
Roberts $ 53500
Stocker $ 53500
Vizard $ 53500
This is not the complete list. It only lists those who have most connection with the Union. For past greats and the passing parades we have:
- Who is Who - Apr 99
- Who is Who - Apr 97
- Who is Who - Nov 96
- Who is Who - Apr 96 changes
- Who is Who - History
- Who is Who in Business Units
- IR Parade
TELSTRA'S LEADERSHIP TEAM
The Telstra executive team is made up of the CEO and 10 Group Managing Directors as follows:
- Bruce Akhurst Group General Counsel & Legal & Regulatory
- Chris Gardner Employee Relations
- Kate Christie ER
- Chris Gardner Employee Relations
- Doug Campbell Wholesale & International
- Rob Cartwright Employee Relations
- Paul Baulch OHS
- Justin O'Connell Leadership and Organisation Effectiveness
- Laurie Wood Reward & Analysis
- Ann Diamond Employment
- Ken Sharpe Payroll
- Gary Cassidy Personnel
- Stuart O'Keefe Workplace Reform
- Ros Holihan TBS
- Cathy Callagan Personell NSW
- Robyn Clark Personell Vic
- Gary Clifton Personell WA SA
- Jeff Seymor Personell Qld
- Brian Douglas Simplification
- Karen Halfpenny ER F&A L&R PA&CM
- Glen Peterson ER C&C
- John Wood ER MTG
- Jeremy Scrivens Compensation
- Alf Forster Learning
- Gerry Moriarty Network & Technology Group
- Phil Hastings Infrastructure Management and Operations
- Ted Pretty Convergent Businesses
- Paul Rizzzo Finance & Administration
- Dick Simpson Mobile & Wireless Communications
- Graeme Ward Public Affairs & Corporate Marketing
- Lindsay Yelland Business & Government
- Roger Bamber Service
- Peter Shore Consumer & Commercial
- Graham Markey Business Planning
- Darian Stirzaker Payphone
- Les Ayres Service Improvement
- Bob Gibbons Area Implementation WA/SA
- Michael Rocca Service
- Greer Furmage Rural and Remote
- Anthony Rix Service Assurance
- Jim Neibling Access Renewal
- Mark Hatton Field Services
Key indicators
91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00
Revenue $m 12229 12656 13363 14081 15239 15983 17302 18218 19840
EBITDA pre Abnormal $m 5252 5316 5743 5576 6021 6597 7375 8351
Deprec & Amort 2084 2122 2123 2204 2351 2326 2322 2502 2646
EBIT before Abnormal 3168 3193 3620 3373 3670 4244 5102 5898
Net Interest 1048 837 678 400 428 439 511 499
Op Profit pre Abnormal 2120 2356 2942 2973 3242 3805 4468 5320 5921
Abnormal Items -1461 -362 -414 -568 204 -1732 0 0 -572
Operating Profit pre tax 658 1994 2528 2405 3447 2073 4468 5320 5349
Income Tax 345 1090 823 650 1145 -464 1468 1832 1676
Op Profit after Tax 313 904 1705 1755 2302 1609 3000 3488 3673
Minority Interest -14 -0.5 -5 -3 -3 -8 -4 -2 4
Op Profit after Tax&Min 300 905 1699 1753 2305 1617 3004 3486 3677
Dividend 478 674 738 944 1368 4146 1802 4247
Capital Investments 2925 2726 2651 3351 4093 4504 3890 4386
Total Assets 22827 23160 21139 24083 24362 25858 26470 27682
Gross Debt 8922 7717 5901 6149 5355 7981 7722 7211
Shareholders' Eqity 9905 10886 10756 11727 12667 9886 11033 10256 11602
Dividend (cents/share) 10.6 32.2 14.0 33.0 18.0
Earnings/share cents 16.9 20.0 23.3 27.1 28.6
2011 2010 2009 2008 2007
$m $m $m $m $m
Sales revenue 24983 24813 25371 24657 23673
EBITDA(1) 10151 10847 10948 10416 9861
EBIT(2) 5692 6501 6558 6226 5779
Profit 3250 3940 4076 3711 3275
Dividends (c per share) 28 28 28 28 28
Total assets 37913 39282 39962 37921 37837
Gross debt 16232 16031 17036 16285 15547
Net debt 13595 13926 15655 15386 14724
Total Equity 12292 13008 12681 12295 12580
Accrued capital expend 3410 3471 4598 4897 5879
Free cashflow 5477 6225 4365 3855 2899
(1) Operating profit before interest, depreciation and amortisation and income tax expense. EBITDA is used as a measure of financial performance by excluding certain
variables that affect operating profits but which may not be directly related to all financial aspects of the operations of the company. EBITDA is not a measure of
operating income, operating performance or liquidity under A-IFRS. Other companies may calculate EBITDA in a different manner to us.
(2) EBITDA less depreciation and amortisation.
(3) Profit for the year after non-controlling interests
Profit at $1397m (up 16%) despite reduced revenue growth.
However, an abnormal loss of $1026m is posted to cover redundancies. The final profit is only $742m. Staff are to be cut by 22000 by 1999.
Staff have been cut by 7000 from 76522 to 69483.
Visionstream accounted for some staff cuts.
Foxtel losses of $98m (cumulatively now $270m) also included.
John Howard will also be delighted with the announcement of more full time staff cuts. A total of 25,500 quality full time jobs, located in every electorate in Australia, will be cut.
TELSTRA FINANCIAL PERFORMANCE
91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99
Financial Ratios
Earnings per share (cents)
- (before abnormals) 20.0c 23.3c 27.1c
- (after abnormals) 12.6c 23.3c 27.1c
Dividends per share
- (ordinary) 32.2c 14.0c 17.0c
- (special) 16.0c
Return on Assets
- (before abnormals) 14% 15% 17% 16% 16% 17.7% 20.1% 22.7%
- (after abnormals) 8% 13% 15% 13% 17% 10.1% 20.1% 22.7%
Return on Investments
- (before abnormals) 17% 19% 22% 22% 23%
- (after abnormals) 9% 16% 20% 18% 24%
Return on Equity
- (before abnormals) 12% 14% 18% 18% 18% 20.1% 28.7% 29.9%
- (after abnormals) 3% 9% 16% 16% 19% 12.7% 28.7% 29.9%
Interest Cover (times)
- (before abnormals 3.0 4.0 5.0 8.0 9.0 9.7 7.6 9.4
- (after abnormals) 2.0 3.0 5.0 7.0 9.0 5.5 7.6 9.4
Debt Ratio 47% 42% 36% 35% 30% 44.5% 41.1% 36.9%
Expenses 11570 10661 10834 11676 11900
Wages/Super/Compo 2687m 2851m 3914m 4332m 4401m 3665m 3270m
Wages as % of expenditure 36.3% 44.6% 24.9% 21.2% 17.9%
(FROM ANNUAL REPORTS)
91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99
Executives where
salary greater $1.6m - - - - - - - 1*
salary $1.3m - $1.6m - - - - - 1 1 1
salary $1.2m - $1.3m - - - 1 - - - -
salary $1.1m - $1.2m - - - - - - - 1
salary $1.0m - $1.1m - - - - - 1* - 2
salary $900k - $999k - - - - 1 - 1 3
salary $800k - $900k - - - - - - - 1
salary $700k - $800k - - 1 2 2 2 1 1
salary $600k - $700k - - - 2 5 3 5 3
salary $500k - $600k - 1 - 3 10 3 4 4
salary $400k - $500k 1 - 2 2 10 8 8 16
salary $300k - $400k - 2 6 6 10 10 15 14
salary $200k - $300k 5 11 13 28 44 28 37 30
salary $100k - $200k ? 73 69 59 37 38 33 20
Total Executives ? 87 91 103 116 93 103 94
*includes redundancy payment
MD Salary approx $k 450 515 785 1205 915 1415 1415 2100*
*estimate
Actual income of top execs - this includes fixed, short and long term incentives
98-99
Blount $3,709,561
Switkowski $1,173,838
Rizzo $1,078,420
Campbell $1,008,586
Moriarty $ 997,420
Shore $ 939,253
Yelland $ 926,003
TELSTRA PERFORMANCE ESTIMATES MARKET SHARE
Telstra Market Share Estimates only
1991-92 1993-94 Dec96
STD calls 100% 90% 82%
International 100% 78% 70%
Mobile AMPS 100% 66%
Mobile GSM na 45%
Local calls 100% 98%
Basic access 100% 98%
Dec 96: Cable has passed 1.5 million living units.Digital lines now at 79% - target 100% by Dec 98.
SDH transmission capacity is 59% - target is 100% by Dec 97.
From EEO Report of 31-1-95 30-6-95 31-3-96
Admin 20114 19850 20329
Artisan 600 521 478
Building Services 631 294 284
Communications Officer 13484 14829 16734
Drafting 348 308 276
Executive 1033 1090 1081
Information Technology 1847 2117 2816
Manager 1424 1511 1643
Material Distribution 656 631 613
Media 5 4 1
Operator service 6921 6356 6207
Product/Other 34 36 34
Professional 2551 2544 2494
Salesforce 1830 1877 1892
Technical 47 44 48
Technician 19337 19777 19669
Trainee 20 11 6
TOTAL 70882 71800 74605
History: Total Telstra staff peaked about 1986 at about 96,700
(includes about 2,200 OTC staff).
1994: A low was reported in early 1994 at 67,000 - this followed
a major slash and burn exercise. Telstra found that some cuts had
been excessive.
1995: prediction re Staff estimated 60000 by year 2000.
1995: In mid 1995 staff numbers rose to about 73,000. This rise
was caused by a correction to the excessive cuts and by the roll
out of Pay TV cable.
1996: Mar 96 the staff was 74605.
1996: Jun 30 - there were 76,522 staff.
1996: In late 1996, Telstra confirmed that staff would be cut by
22,000 over 3 years, in order to satisfy Government demands.
1997: Mar 31 - staff now at 67,364.
1997: Jun 30 - staff now at 66,100.
1998: Jun 30 - staff now at 57,234
1998: June 30 - In annual report Telstra say their (previously unannounced)
policy is to reduce staff by 27,500 over 5 years beginning 1st Jul 96.
So far 20,800 were sacked in the first 2 years. Another 7,000 are yet to
be sacked.
1999: Dec 31 - staff at 51,667
2000: Dec 31 - staff at 47,075 - another 5,000 (11% staff cut is projected.
The sale of NDC would see 6,000 more "let go".
STAFF SLASHINGS IN TELSTRA
Apr96-Mar97 Mar97-Mar98
Location Telstra C&C Telstra C&C
QLD Brisbane -91 -388 -923 -559
QLD Country -68 -278 -1313 -686
SA Adelaide -92 -247 -461 -129
SA Mt Gambier -13 -15 -22 -10
SA Murray Br -29 -19 -34 -20
SA North SA 8 -46 -64 -37
SA Pt Lincoln 8 -6 -18 1
TAS Hobart 98 58 -91 -65
TAS Burnie 8 9 -18 -8
TAS Devonport -3 -4 -15 -11
TAS Launceston 0 8 -23 -17
VIC Melbourne 706 420 -2668 -1291
VIC Ballarat 30 24 -100 -111
VIC Bendigo 82 79 -65 -22
VIC Central V 94 92 -103 -79
VIC Geelong 39 21 -55 -35
VIC Gippsland 104 84 -109 -64
VIC Nth W Vic 33 28 -31 -12
VIC Sth W Vic 142 121 -104 -67
WA Perth -266 -456 -435 -151
WA East WA -27 -26 -38 -21
WA Geraldton -7 -7 -9 -8
WA North WA -8 3 2 3
WA South WA -14 -23 -59 -31
Unknown -8379 -5531 -19 2
TOTAL -7390 -6652 -8749 -3503
Country Losses 422 260 -2069 -977
City Losses 562 -1381 -6681 -2523
Source: Senate hearings May 1998
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