Telecom CEO Paul Reynolds is under pressure from fund managers to sort out the gaps in his executive team. Photo / Richard Robinson
Telecom CEO Paul Reynolds is under pressure from fund managers to sort out the gaps in his executive team. Photo / Richard Robinson
KEY POINTS:
Pressure is building on Telecom to quickly replace two senior executives to quell investor impatience with a slide in earnings and a share price near a 15-year low.
The Sydney Morning Herald reported today that some fund managers believe new chief executive Paul Reynolds, formerly of British Telecom,should employ the strategy used by Telstra boss Sol Trujillo, who has surrounded himself with former colleagues from regional telecom US West, to plug holes in his executive team.
The heat is expected to come on Mr Reynolds and chairman Wayne Boyd to announce at an investor briefing in Sydney on April 10 a detailed plan to halt a deteriorating trading performance in New Zealand.
Telecom has still to appoint a chief financial officer seven months after Marko Bogoievski announced his resignation. Mr Bogoievski, highly regarded in financial markets, left in January. It is also searching for a chief information officer to replace Mark Ratcliffe, who is to become boss of the network operations.
The paper quoted one fund manager as saying the market wants to see a lot of new information and would be disappointed if Telecom hasn't announced a CFO by April 10.
"There are a whole lot of questions to be answered. What is Mr Reynolds looking to do to address that ongoing slide in earnings?" the New Zealand fund manager said.
Telecom's shares could also be further savaged if it signals another dividend cut - to 6 cents a quarter from 7 cents - as forecast by ABN Amro, he said.
Justin Braitling, manager of the listed Australian Leaders Fund, said Telecom's performance in mobile data and broadband - two key growth areas - had been very poor in the first half. He is concerned that Telecom NZ will lower its earnings targets next month.
Telecom shares closed on $3.82 yesterday, down 23 per cent since July.
