Optus under pressure to find new CEO amid takeover talk

The telecommunications union warns a lack of stability at Optus is ‘clearly impacting its ability to deliver’ as Canadian investment giant Brookfield circles.

Optus has been without a permanent CEO since Kelly Bayer Rosmarin resigned in December after appearing at a Senate inquiry into the national outage.

Pressure is mounting on Optus’s owner Singtel to find a permanent chief executive for its Australian subsidiary as the Communications Workers Union warns a “lack of stability” is “clearly impacting its ability to deliver”.

Singtel is understood to be speaking with Canadian private equity titan Brookfield about a selldown of Optus, which would value the company at $16bn.

Talk of a sale comes as Optus has been without a permanent chief executive since Kelly Bayer Rosmarin resigned in December after appearing at a bruising Senate inquiry into last year’s national outage. The telco faced a smaller service disruption on Friday, which hit calls to certain 1300 and 1800 business numbers hosted off an exchange in Victoria.

“We apologise for the inconvenience this caused and thank our customers for their patience. Our teams are working hard to restore all services as quickly as possible,” a spokeswoman said, adding the outage had been largely resolved.

Communications Workers Union national assistant secretary James Perkins feared Optus and its staff could face further problems if the telco was sold in its current form, citing a lack of stability.

“There are major challenges in stepping into a business when you don’t know who the next CEO is going to be,” Mr Perkins said.

“The lack of stability in the company is clearly impacting its ability to deliver – demonstrated by the shambolic outage failure and its repeated job cuts throughout the last two years.“

Mr Perkins said the union will confront any potential buyer of Optus to ensure the telco’s employees receive fair pay and conditions should the business be sold.

“We have negotiated a number of successive enterprise agreements with Optus, and we will ensure those conditions continue to apply to all Optus employees, regardless of any change in management or ownership.”

Singtel has downplayed the takeover talks, saying there is “no impending deal to offload Optus for the said sum”.

It says it is prioritising network resilience and finding a new boss for Optus, a process that can take up to a year or more if a chief executive has to extract themselves from another organisation, and one that has become more complex amid talk of a potential takeover.

Like Singtel, Brookfield is known as an active investor. It adopts a hands-on approach selecting management and board members to ensure its portfolio companies run smoothly and deliver maximum returns.

An executive that Singtel picks might not be Brookfield’s ideal candidate, potentially triggering some hesitation about accepting a job that not only requires overseeing a rebuilding of public trust but one from which they could be quickly removed in the event of in a successful takeover.

Brookfield has declined to comment on the takeover talks.

But savvy chief executives know how to turn this to their advantage, negotiating material change clauses in their contracts, which can be highly lucrative.

Former Crown CEO Steve McCann left the company after a year and $9m payday. Picture: Richard Dobson

Former Crown Resorts boss Steve McCann took on the job when US private equity firm Blackstone was circling. A year later he had left the company with $9m in his pocket, with Blackstone installing its own candidate Ciaran Carruthers.

But if a chief executive can impress a private equity owner and stay on that can also be lucrative, with firms shuffling them around their various portfolio companies and ensuring handsome paydays when exits are achieved.

For this reason, one leading recruiter said many potential candidates want to be introduced to private equity groups.

Christine Holgate – who said former prime minister Scott Morrison “bullied” out her job running Australia Post – is now chief executive of Team Global Express, which is owned by private equity firm Allegro Funds. This is despite being named as a potential candidate for other high profile positions.

Christine Holgate has been turning around Team Global Express, which is owned by Allegro Funds.

Going back further, former Coles managing director Steve Cain – who was removed from that position in the mid 2000s – later joined Pacific Equity Partners, a move that later paved his return to running the supermarket chain when it became a standalone listed business.

Former Coles CEO Steve Cain had a stint in private equity before returning to run the supermarket chain. Picture: David Geraghty

Yet more than four months after Ms Bayer Rosmarin’s resignation, Singtel has offered no clues about how the Optus CEO search is progressing. As for selling the telco, which it acquired for $17.5bn in 2001, it’s willing to take its time.

“There is no impending deal to offload Optus for the said sum, as reported,” Optus said in an announcement to the Singapore Exchange this week.

“That said, we regularly conduct strategic reviews of our portfolio to optimise the value of our assets and businesses and will explore all options to maximise shareholder value.”

Singtel has never run a formal sales process but in the last 12 months it is understood to have let the likes of Blackstone,

Brookfield and the nation’s biggest superannuation firms know that it is very open to offers for all or parts of its Australian business and has considered an initial public offering.

Optus interim CEO Michael Venter.

Optus could be attractive to private equity because of the potential to monetise its infrastructure assets. Bigger rival Telstra sold a 49 per cent stake in its mobile towers in 2021 for $2.8bn, reflecting a massive earnings multiple of 28 times.

It is understood that Blackstone is looking at taking a significant stake in Optus, rather than buying the entire business. But even that deal is complex, given the regulatory environment in Singapore and working out how much control to hand over to Brookfield.

This will take some time to work out and then it’s uncertain if it will proceed. Interim chief executive Michael Venter doesn’t want takeover speculation to distract staff at a time when the telco has sacked more than 200 of them, hammering morale.

“You have my commitment that we will always seek to inform you about important matters ­affecting the future of our business. We can’t let media speculation distract us from the important work in front of us as we continue our work to rebuild customer trust,” Mr Venter said in a note to staff.