Telstra showdown as field for CEO narrows

The chairman of the Future Fund, David Murray, has repeated criticisms he made to the Herald a fortnight ago about the direction the telco has taken as it struggles to adjust to an onslaught by the Federal Government.

The Future Fund, which owns 16 per cent of Telstra, has watched $1.7 billion of its stake in the company fade away in the past 10 months as the share price hits new lows.

Discounting its Telstra shares, the fund, which invests government money in order to fund public service superannuation liabilities, has posted a negative return of -8.8 per cent so far this financial year. Including Telstra, the figure is -15.5 per cent.

"We are disappointed and concerned by the loss of value in recent months, and the board of guardians has raised its concerns with the company," Mr Murray said yesterday.

The disappointing figures add to the expectation that when the Telstra board, chaired by Donald McGauchie, meets on Thursday it will anoint David Thodey, managing director of the enterprise and government division, as Mr Trujillo's successor.

Industry insiders and analysts are largely complimentary of Mr Thodey, who they say is sufficiently distant from the aggressive Mr Trujillo not to be tarred with the same brush.

One source close to the company said: "He's got fantastic values, he's a good, consistent leader and he's got a firm view that they [Telstra] need to talk sensibly to government. He listens to people."

An analyst with BBY, Mark McDonnell, would not comment on Mr Thodey himself, but cautioned against assuming that he would be able to put relations with the Government back on an even-footing.

"The problem I have with this proposition about being conciliatory is, is this a blank cheque? We're going to agree to whatever? The Government keeps moving the goal posts and at the same time is being very, very opaque about what their policy objectives are."

There is speculation that one overseas candidate is still being considered for the job. It is also conceivable that Telstra's chief financial officer, John Stanhope, could get the nod, but Telstra-watchers say he is inextricably linked to the policies of Mr McGauchie and Mr Trujillo.

The legacy of Mr McGauchie and Mr Trujillo has been severely buffeted in the past few months. A source said: "Suppose Thodey wants to get in there and clean up. How much is he going to be allowed to do by McGauchie? The more he cleans up, the more it shows up McGauchie and Sol."

That question becomes moot in the event that Mr McGauchie and at least some of the board members also move on.

The source said: "I think McGauchie will have to fall on his sword, [Peter] Willcox is a dead man walking, [Charles] Macek and [John] Stocker don't have the ability."

Future Fund results - Page 16