Insiders back Gattung's story

Photo: Dominion Post

Telecom chairman Wayne Boyd with Theresa Gattung when she announced her resignation as Telecom CEO.

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FORMER TELECOM insiders have endorsed ex-CEO Theresa Gattung's portrayal of a company betrayed by the government and its communications minister David Cunliffe in the regulatory upheaval of 2006.

"I think it's accurate," said one. "I think the best part of this is that there's a chance for another side of the story to be laid out."

Another said: "My recollection is the team were genuinely surprised by that [the government's decision to split Telecom]. There had been a significant amount of engagement over a long period of time."

A third said: "I don't buy the story that Telecom was so arrogant it assumed the government would never do anything. The company I worked for was exceedingly conscious of those risks."

Much of a new book by Gattung, Bird on a Wire, is devoted to the events leading up to her departure in June 2007 after the then Labour government forced Telecom to separate into two operations, one running the copper and fibre networks, now called Chorus, the other running everything else.

The move devastated Telecom's share price and led to the departure of much of its executive team.

Of her decision to resign, Gattung writes: "I knew I couldn't stay on – it would have done my head in. Given the government's intention to impose operational separation on Telecom, I no longer believed that the company could grow its earnings and a person can't lead a publicly listed company if they don't believe that, unless they are prepared to be very cynical."

She also reveals her dismay at the flip flop by Telecom's board, which initially decided the best option would be to carve off Chorus into separate ownership, only to change its mind.

"I believe that what happened during this period (and this was later corroborated by a reliable source) was that the board had started interviewing for CEO candiates... and they had spoken to more than one who told them what they probably wanted to hear – namely that operational separation was manageable from a shareholder value perspective."

Current CEO Paul Reynolds has been open in his belief that operational separation could be made to work and is likely to have been among those who convinced the board to change its mind.

The decision has had huge implications for Telecom since the National-led government embarked on a scheme to invest $1.5 billion of public money in a new fibre optic network, while effectively barring companies with a retail operation, such as Telecom, from taking part.

The move could duplicate big chunks of Telecom's infrastructure and devalue its network assets.

One former Telecom staffer said the outcome was a missed opportunity. "Ironically, we were so mistrusted at the time that that move – structural separation – even though it was a huge one for us, wasn't taken seriously.

"We were trying to avoid exactly what's happening now. I don't really like the fact that we were right, five years and hundreds of millions down the track."

None of the former Telecom insiders spoken to by the Sunday Star-Times would criticise Gattung's dealings with the government, though some suggested the company had flaws.

Regulation had come as a surprise, said one, "but there were a couple of interludes that gave us the impression all was not well.

"What a lot of people forget is the guy who was head of regulatory strategy was Mark Verbiest... and he walked out of Telecom with a bag of gold. Some of the [Ministry of Economic Development] officials were wary of him."

Another said the close-knit team, who made a virtue of openness and debate, held divergent views on how to handle regulation.

"There was a kind of hawks and doves split in terms of views on ways to approach the government," he said. Among the hawks was chief operating officer Simon Moutter, among the doves was Gattung.

"That was probably the most difficult part of working in Telecom – you had some divergent views on those topics and I never got the sense Theresa took some of her team with her. That may have held the company back from being committed to one path.

"You also had Roderick [Deane] as chair who took a hard line on regulatory issues. Roderick on top and Simon underneath – she was the meat in the sandwich."

Not all ex-Telecom people agree with that interpretation, but they do agree on Gattung's qualities as CEO. "She is incredibly candid and up-front so there were never any secrets or surprises," said one.

This quality had led to some unfortunate outcomes in the media, he said, citing the infamous remark – published on Telecom's own website – about using confusion as a marketing tool.

"I was at that briefing in Sydney and I was quite horrified at the interpretation placed on it. She was actually highlighting that using marketing in that way was inappropriate and unacceptable and here's what Telecom and the industry needed to do. So to have that thrown back in her face, I thought, was pretty harsh at the time.

"But Theresa's not the sort of person to finesse the wording of things in order to be safe, she's just going to call it as it is."

Bird on a Wire, by Theresa Gattung, is published on March 12 by Random House.

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