Telstra chairman John Mullen has claimed all Australians would have access to high-speed internet at a “fraction of the cost” if the government had not proceeded with the $50 billion National Broadband Network project.
Mr Mullen admitted to shareholders at Telstra’s annual general meeting on Tuesday morning that the country’s biggest telecommunications company should bear some of the blame due to its “recalcitrance in helping the government at the time”.”The creation of the NBN 10 years ago has had a seminal effect on our industry and Australia,” Mr Mullen said.
“It is always easier to comment with the benefit of hindsight, but it is my view that over the last 10 years private sector competition between strong players such as Telstra, Optus, TPG and others was always going to build 100 Mbps broadband access and speed to the majority of the population of Australia, in an ongoing competitive landscape and at no cost whatsoever to the taxpayer,” he said.
Mr Mullen said the government could then have decided how much in subsidy they could provide to the industry to extend this coverage to regional and rural areas where the private sector economics didn’t stack up.
“This would have been at a fraction of the cost of today’s NBN,” he said.
Telstra has been hit hard by the roll out, with a $1.7 billion ongoing impact to earnings since the 2016 financial year and by the end of the roll out will be down $3 billion a year.
The negative impacts from the NBN and increased competition in mobile have seen Telstra push a radical transformation plan Telstra 2022, including cutting a third of its workforce and overhauling plans and legacy systems.
“There is a risk that media scrutiny, populist criticism and governance challenges [may lead] executives to look for alternative career paths.”
At last year’s annual general meeting shareholders were frustrated after a year of share price falls and voted against Telstra’s big executive bonuses. The biggest proxies have this year recommended a vote for the remuneration report, meaning Telstra is not expecting a second strike that could result in a board spill, after investor feedback was used to change the incentives for the company’s leadership team.
Mr Mullen said market dynamics, including those “outside management’s control” such as the NBN Co, had been challenging and impacted shareholder returns and created challenge and volatility.
He warned that while transparency and accountability were good he needed to ensure “pendulum does not swing too far and we lose top talent”.
“Today there is a real risk that the media scrutiny, populist criticism and governance challenges are starting to lead talented executives to look for alternative career paths such as private equity where they can build their careers out of the spotlight,” he said.
Shareholders will also vote on the re-election of former AMP chief executive Craig Dunn to Telstra’s board, which major proxy CGI Glass Lewis has recommended against arguing he “bears normative responsibility” for the bank’s conduct that was uncovered during the Hayne royal commission.
Mr Mullen defended Mr Dunn, who joined the board in 2016 and is chairman of the audit and risk committee, describing him as one of the “best public company directors in the country”.
“We are aware that there has been commentary about Craig’s association with AMP where he was CEO more than six years ago. However, it is important to note that at no time has Craig ever been accused of anything improper himself,” Mr Mullen said.
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