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Telstra seeks to head off pay protest with apology to shareholders
AUSTRALIA'S largest telecom firm, Telstra Corp Ltd, wrote an apology to shareholders on Thursday to head off a vote against executive pay at its annual meeting, after a tumultuous year where profit fell and shares hovered near all-time lows.
Telstra has struggled for growth as competition and technology hammer its mainstay businesses, pounding its share price and pushing it to its weakest annual profit in six years in August.
The company has already cut executives' bonuses by nearly a third, which it re-iterated in the letter, sent out days before shareholders vote on pay structures at the company's annual general meeting in Sydney on Oct 16.
Telstra is keen to avoid a protest vote because if more than a quarter of shareholders disapprove of the pay packets in consecutive years it triggers a vote to spill the board under Australian law.
"On the other hand, competition has never been more intense, our market dynamics are shifting rapidly, and customer expectations are changing, " said Telstra chief executive officer Andy Penn. He pointed to the accelerated roll-out of a national broadband network, in particular, as weighing on the company. "This is having an enormous impact on our business - wholesale prices have risen, meaning we and other industry participants are facing a fixed-line market where reseller margins are rapidly reducing," he said.
"At the same time, competition in the mobile market is increasing with the expected entrance of a fourth mobile network operator. These factors have influenced our performance this year."
In a bid to transform the business to deal with the new realities, Telstra, one of Australia's largest employers, has put in place a new strategy to be achieved by 2022.
This includes a plan announced in June to axe 8,000 jobs- a quarter of its workforce - in a bid to achieve an extra A$1 billion in cost-cutting, on top of A$1.5 billion previously announced. It will also split its mobile and infrastructure divisions into separate businesses.
"We are determined to meet the challenges we face, and to continue to lead in the market, just as we have always done," said Mr Penn.
Telstra said that it will pay a six-monthly dividend of 11 A cents for a full-year payout of 22 A cents. AFP