Editorial: Gattung's past her use-by date

Opinion

Theresa Gattung's swift rise to the chief executive's desk at Telecom was based on her charisma and marketing nous. During her six-and-a-half-year tenure, she has used them well, selling a message that often befuddled New Zealanders and the Government but always benefited the company's shareholders. Perhaps too well. The whiff of hubris has been to the fore in the aftermath of the Government's decision to unbundle the local loop. And the sense of perplexity now extends to Telecom shareholders, who face heavy losses on their investment.

The latest revelation, and perhaps the most damaging, concerns her admission to financial analysts in March that Telecom was "not being straight up" with customers. She told the same forum that the threat of regulation could be discounted because "the Government is way too smart to do anything dumb". The first statement raises ethical questions and risks damage to Telecom's reputation. The second suggests arrogance is rife at the company's headquarters, albeit that past dealings with the Beehive gave Telecom good reason not to expect action.

The comment on customer strategy was made in the context of telecommunication companies using confusion as their chief marketing tool. The practice is, of course, not restricted to that sector. A company occupying a dominant position but not offering the best prices in a market has good reason to want to muddy the field. The less transparency, the greater the prospect that customers will stay with the most recognised brand.

The downside of that strategy is the potential damage to a company's brand when the public recognises what is going on. The risk is even greater if people sense they have been victims for a long time. For some, this will be all about principled business practice, and whether a company can ever be trusted again. Others may see it simply as unfair, and a hindrance to buying the product or service that best fits their needs. Either way, it is extraordinary that Telecom put the comments on its website, even if it now claims, unconvincingly, that a new strategy will cede more control to customers.

The Prime Minister has reacted to Theresa Gattung's claim that unbundling was not on the Government's agenda by suggesting anyone who believed that "must have had their head stuck firmly in the ground". That is a touch unfair because the tumbling of Telecom's share price after the announcement suggests few in the market saw it coming, either. Additionally, the company had been able to stave off unbundling since 2000, when a ministerial inquiry first recommended it. Telecom's success had included persuading the Cabinet to ignore the advice of Paul Swain, then the Telecommunications Minister.

It is curious that the Government's latest threat was also seen as empty. This, after all, is a company with links so close to the seat of power that it was leaked confidential Cabinet papers within hours of the unbundling decision being signed off. Clearly, it had become seriously out of touch. Equally, its chief executive was guilty of a grievous misjudgment. Her surly reaction merely compounded the problem, as did the company's obfuscation over the fate of the Cabinet papers.

Theresa Gattung also told the March briefing that she had not done enough to polish Telecom's tarnished public image. She talked of re-engaging with "the hearts and minds of ordinary New Zealanders". The latest revelations could make the level of disconnection greater than ever. That, in itself, suggests her time at Telecom should be up. When she took the top job, she noted that the typical term for a chief executive was five to seven years. On that count, and others, the time for her departure is nigh.