Telecom has begun the process of selecting the senior management and governance roles for the two companies that will be created, should the Chorus demerger go ahead.
As part of the deal to partner with the government in the Ultra Fast Broadband network, Telecom intends to structurally separate by the end of the year. Subject to the Telecommunications (TSO, Broadband, and Other Matters) Bill being passed before June 30, and assuming the demerger proposal receives shareholder approval, Telecom will split into two companies nominally called Chorus 2 and Telecom Retail by the end of the year.
Telecom chairman Wayne Boyd says when the time comes to vote, documents to shareholders will include the names of the board members and senior executives likely to head each company. Yesterday the company announced that Sue Sheldon, a current Telecom board member, will be chairman of Chorus.
“People need to know who she is because it is going to be a separate company. And when we present out scheme documents, we’ll have who the chairs and executives are,” Boyd says.
The new chief executive for Chorus is widely expected to be Mark Ratcliffe, who spearheaded Telecom’s UFB negotiations and who has indicated to Computerworld he would be interested in the role.
When asked if the company was seeking to recruit internally or externally to those senior roles, Boyd replied: “I just want to say we’ve got a process underway, we’ve got very short time frames.”
Boyd signalled to the market last year that he would step down as Telecom chairman after the UFB tender process and the proposed structural separation were complete. He says his likely leaving date is the end of the year. “This is a court process [ the demerger] so by the time we get the documents completed and suitable to apply to the court we will seek their approval to set a date for the shareholder meeting. We’re talking the last quarter of 2011,” he says.
Next month marks Boyd's fifth anniversary as Telecom chair. He was appointed to the role after Roderick Deane stepped down following the then Labour government's announcement it would introduce local loop unbundling and operational separation of Telecom.
It was under Boyd’s watch that current Telecom CEO Paul Reynolds was recruited from his role as chief executive of BT Wholesale in the UK. Yesterday Reynolds told a media conference he is staying on, and Boyd says the Telecom board has had no discussions on Reynolds’ future.
“It’s a complex separation, we need shareholder approval, there are people that have debt in the company, and we’ve got all the staff issues, not to mention all the customer issues and so on,” Boyd says.
“We just need Paul focussed, as he will be, on getting this done and if there is to be any transition, making sure it is orderly.”
Assuming structural separation occurs, Boyd expects Telecom Retail will operate like other retail service providers and won’t be subject to any more or less regulation then, for example, TelstraClear.
“That’s where we’re going. There are certain things that are legacy but not a major. That is why the legislation is so important to us, that is why we’re difficult to deal with. It is not just a contract; we actually need the legislative change to enable us to be confident this is a deal suitable for shareholders.”
If the Bill is passed into law, then the asset split between the two new companies will be publically notified, but it won’t be subject to industry consultation. Computerworld understands this is because Telecom is volunteering to demerge Chorus, it isn’t being mandated to do so.