Could David Thodey beat Craig Dunn to be Telstra’s next chair?

When Andy Penn replaced Thodey, he was critical of the $11 billion deal, even though he shared responsibility for it. Penn was chief financial officer when the NBN deal closed and succeeded Thodey in 2015.

Telstra shares hit $6.60 just before Thodey left in 2015. That year, after the launch of NBN, the share price began to fall and never recovered to those highs. The stock is trading at around $4 a share.

Craig Dunn has been on Telstra’s board since 2016, and was re-elected last October for another term, with a resounding vote in favor from shareholders. He chairs Telstra’s audit and risk committee and is understood to support the nomination of Brady as chief executive. He is also chairman of the Australian Ballet and a director of winemaker Lion.

Ming Long, former chairman of AMP Capital and director of IFM Investors and QBE, joined Telstra’s board in January.

Vicky Brady is considered a safe pair of hands, and he is unlikely to change the course of Penn’s T25 strategy, which includes the partial sale of Telstra’s infrastructure unit InfraCo, which consists of the telco’s data centres, fibre, ducts, ducts and fixed networks. site.

Telstra began structurally unbundling parts of its business in 2021, selling a 49 per cent stake in its mobile tower Amplitel for $2.8 billion, a whopping 28 times the enterprise multiple (the ratio used to determine a company’s value).

While Brady’s focus is likely to be on the upcoming ACCC ruling on the proposed Telstra-TPG bundling of some mobile towers and spectrum before Christmas, her first big test as chief executive will be InfraCo. She will be judged on how she structures and executes 49.9% of sales for the business and its success in creating ongoing value for Telstra.

Telstra chief executive Vicky Brady's first big test will be how she executes the partial sale of InfraCo.

Telstra chief executive Vicky Brady’s first big test will be how she executes the partial sale of InfraCo.Credit:fairfax media

Analysts value InfraCo at between $23 billion and a very optimistic $30 billion. If half of that is sold and InfraCo gets $15 billion at the high end, then Morgan Stanley expects Telstra to pay down $2 billion to $3 billion in debt, do buybacks and raise its dividend.


Morgan Stanley also expects that a partial sale of InfraCo will likely be to a consortium of pension funds, as Amplitel has been, or could involve private equity. Either way, InfraCo’s buyers are likely to be limited to countries belonging to the “Five Eyes” countries for security reasons. A partial listing of InfraCo’s shares is not out of the question.

The challenge for Brady and her team is that InfraCo’s optimistic valuation will be difficult to achieve in 2023. The world is reeling from the multiple shocks of supply chain disruptions from China’s COVID-19 and the war in Ukraine. Leading to soaring energy prices and inflation around the world.

The outlook for the global economy next year is uncertain, with fears that the U.S. and U.K. could slip into recession, leading to volatility in debt and stock markets. Such an environment means there are fewer buyers for InfraCo than when the deal was done on Amplitel. During challenging times like these, CEOs need the empathy and support of their chairmen. Whether it’s still Mullen, Dunn or potentially Toddy remains to be seen.

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