Why Thodey must weather an investor storm

Telstra is currently conducting detailed plans to determine what its business might look like in 2020.

In his KGB interview (KGB: Telstra's David Thodey, September 28) , Telstra chief executive officer David Thodey gives us a first peep into some the matters being discussed.

If you have time look at the video, because Thodey's eyes tell you the story even though he is being careful with his words.

The Telstra being planned for 2020 may still be an income stock, but it will also be a growth stock.

Thodey reveals that the ill-fated Telstra cable investments of decades ago are suddenly thrusting Telstra into the role of an Asian cloud-computing supplier. This is going to be an enormous growth market. Telstra is investing $600 million into the venture over three years. In the Telstra 2020 vision, if the returns are there, this level of investment should be multiplied many times.

Cloud computing is going to dominate world computing and Telstra has a unique position to be a major player in our region, thanks to past long-term strategic decisions made in the face of institutional anger at the time. Thodey and his people need the courage of their predecessors to magnify that opportunity rather than simply give all the cash back as the institutions want.

Thodey also shows us how Telstra might use its sporting media techniques to create new markets in Asia. Thankfully Telstra is not a bidder for the Nine Network.

And Thodey reveals that Telstra is holding its increased mobile market share and, so far, there has not been a price war. This is good news for shareholders.

Telstra is in its current position in the mobile market because two previous chief executive officers Ziggy Switkowski and Sol Trujillo ignored pleas from the short-term focused institutions and invested huge sums in the mobile network even though immediate returns were not good.

Thodey inherited the benefits of those good decisions but he also incurred the wrath of the institutions by investing $1 billion to lift mobile market share. He was also lucky that one of his mobile opponents fell over during this time.

Just as Switkowski and Trujillo had the courage to invest for the long term, that's what Thodey must do in cloud computing.

While Thodey's successors will gain the advantage, Thodey will also be well aware that both Switkowski and Trujillo left their Telstra CEO posts under a cloud. The correctness of their decisions was recognised later.