Big ambitions: Incoming Telstra boss Vicki Brady wins investor approval

Telstra’s incoming chief executive Vicki Brady has insisted she can generate growth at the telco despite significant strategic challenges, as investors endorsed her appointment to one of the biggest jobs in corporate Australia.

The $46 billion carrier announced Ms Brady as the successor to long-serving Telstra boss Andy Penn, who will step down in September after seven years in the role. Currently Telstra’s chief financial officer, Ms Brady has also led the company’s consumer and small business operations and held senior roles at Optus.

She will be charged with executing Telstra’s $500 million cost-cutting strategy, known as T25, but said she hopes to grow the business by boosting customer service and by investing in its networks and technology.

Telstra’s chief financial officer Vicki Brady will become CEO on September 1.Credit: Eamon Gallagher

“Can Telstra be a growth company? Yes, that’s absolutely our ambition,” Ms Brady said. “Beyond 2025 there are really extraordinary growth ambitions and various ways that we can innovate.”

Telstra shares closed down 0.8 per cent at $3.90, in line with a decline for the broader sharemarket. Investors and analysts welcomed Ms Brady as a safe pair of hands to take the telco into its next stage of growth.

“You always worry about the change at the top, but Vicki certainly puts our mind at ease,” Pengana Capital principal and Telstra shareholder Rhett Khessler said. “She has steered the company through a number of complex yet shareholder accretive transactions.” Telstra is one of Pengana’s biggest holdings.

Daniel Moore, portfolio manager at Investors Mutual (which owns more than 70 million Telstra shares), said Ms Brady was across the details of the business.

“Whenever we have had meetings with Vicki, we have come away impressed by her industry knowledge and her detailed knowledge of Telstra,” Mr Moore said.

Ms Brady told The Sydney Morning Herald and The Age the telecommunications sector was facing many challenges - including regulatory hurdles that technology companies didn’t face and balancing investment in networks with prices that customers could afford.

“Our industry is always at the forefront of things. That brings challenges, but it also brings bigger opportunities,” Ms Brady said. “We obviously invest a lot of capital in developing and building infrastructure and providing networks and technologies to customers, so making sure we get that focus and balance right to deliver world-leading technology ... at the right price, so we get the right return and can keep innovating and investing.

“We’re obviously heavily regulated as a telco and so ensuring there is some equity around [technology partnerships] is important. Ensuring there is some equity around that is important because there’s a lot of technology providers out there that aren’t under the same sort of obligations that we are.”

MST Marquee analyst Fraser McLeish described Ms Brady as a “natural successor”. “She’s got strong industry experience in operational management at Optus and Telstra plus the CFO role at Telstra,” Mr McLeish said. “She’s well known to the market, respected by investors and I think that natural succession also means that the strategy will remain largely unchanged.”

Mr Penn said on Wednesday that his exit plan had been in the works for some time, with his 59th birthday specifically picked as the day of the announcement.

Telstra chief Andy Penn announced his departure on his 59th birthday.Credit: Eamon Gallagher

“We set this date before the budget was set, before anything else was set,” he said. “We are on the cusp of delivering T22, we have completed a very significant transformation, we have announced what comes next, and we have a very clear road map. The timing for me is right.”

Telstra chairman John Mullen, who joined the press briefing in the early hours of the morning in Europe, said the radical transformation Mr Penn led had been a success.

Mr Penn joined Telstra in 2012 as chief financial officer and has been chief executive since 2015. He led the company through a period of radical change as it confronted intense competition in the mobile market and grappled with the NBN rollout.

He oversaw 8000 job cuts and slashed $3 billion in costs from the business. His T25 strategy, announced last year, will include a further $500 million in cost cuts by 2025.

Mr Moore said: “Andy did a great job considering the industry backdrop he faced with NBN headwinds and an at times irrational mobile competition.”

Telstra’s shares are down almost 40 per cent since Mr Penn took charge, with more than $20 billion wiped off its market value. He also presided over Telstra cutting its dividend, taking it from 31 cents a share in 2017 to 16 cents a share. But he has also struck major deals to boost the value of the company for shareholders.

In the past 12 months, Mr Penn has overseen the sale of a $2.8 billion stake in Telstra’s tower business, the acquisition of South Pacific telco Digicel and a historic infrastructure deal with TPG Telecom, which will give the telco more 4G and 5G spectrum holdings, which will help expand its fixed wireless services. Telstra is also finalising the acquisition of a 51 per cent stake in video aggregation company, Fetch TV and weighing up whether to progress with a public listing of its pay TV company, Foxtel (Telstra owns 35 per cent).

Ms Brady’s annual fixed pay will be $2.39 million, excluding bonuses, the same amount as Mr Penn received in financial year 2021. She will be in line for millions more in bonuses and equity grants.

She said she was acutely aware of the importance of leading a company like Telstra, and the significance of her ascension to becoming a senior female CEO.

“Having grown up in the small country town of Holbrook [NSW] … with a population of 1400 people … I am very aware of Telstra’s heritage and the important role it plays connecting Australians. It is a privilege and an honour to be chosen as its next CEO and lead it through the next era,” she said.

“As the mother of two young daughters, I am also proud to be the first female leader of Telstra. I hope it inspires them to stay resilient and chase their dreams.”

But she said more needed to be done to ensure there were more female CEOs leading Australian businesses. “I’m proud to be part of Telstra, where diversity is a big focus,” she said. “As an industry ... there still needs to be more change, more diversity. For Australia, you can see that in the representation of female CEOs - we’ve still got a way to go. We’re not there yet.”

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