Ziggy's star rises again but NBN path could be tricky

ZIGGY Switkowski's reported imminent posting as chairman of the NBN Co marks an extraordinary resurrection for the man who was dumped unceremoniously by the Telstra board eight years ago.

Some would say the board got it wrong at the time but, in any case, after six years in the job he was probably due for a change.

While the appointment is being written up as a done deal, it should be noted the new government has yet to even name its cabinet and the NBN post would be a cabinet appointment, so while all the stars are aligning behind Ziggy it's probably a week or two before we get the official confirmation. If the government is looking for a network construction expert as chairman, Switkowski would not be the first choice. While clearly a very experienced telecommunications company executive from his days at Optus and Telstra, there is a sense of irony in some circles at him being anointed as the "telco" expert.

Certainly any appointment to an executive role should be for a limited period to let NBN Co boss Mike Quigley escape, because while Switkowski might be the ideal chairman, he is not the ideal chief executive for the company.

Quigley has made clear he would be willing to stay in the job until a successor is named and Malcolm Tunrbull may well benefit from having him hanging around a bit.

NBN is still working on its business plan and is also due to hand its annual report to the government by the end of the month.

While Telstra may be the only incumbent telco in the world not to be involved in a fibre network rollout, its recent history gives some insight into why the previous government opted not to use it to build the network.

First, it didn't trust the company. When tenders were sought Telstra was looking for double the price offered by other bidders, and given the widely divergent views about what should happen, having Telstra in the tent could well have been a nightmare.

In retrospect that nightmare may have proven nationally beneficial, but the wisdom at the time said it was better to use outsiders.

Maybe Telstra was more realistic on its bids and certainly on paper it was also, in retrospect, the most logical company to build the network.

That is easy to say now the company's network and retail assets are separated, but when the decision was taken to build the NBN, the incumbent waged a bitter fight to keep its monopoly.

That same monopoly explains why Australia lags much of the world on digital technology: Telstra, which was enjoying 50 per cent-plus profit margins, was wanting to maintain control.

The highly personable and widely liked Switkowski has since charted his own corporate recovery, with a very successful career as a non-executive director who chairs Suncorp and sits on the Tabcorp and Oil Search boards.

At least one of these jobs will go if he is confirmed as NBN chairman. Given he has served on the Tabcorp board for seven years and is a relatively recent starter at Oil Search, Tabcorp is the most likely job to go.

His five years as Telstra boss covered the dotcom boom and was a tumultuous period, with the company 51 per cent government-owned throughout Switkowski's reign. The final government holding was sold in 2006.

He took risks and the ill-fated PCCW acquisition -- Ziggy's "darn it! deal" -- cost the company more than $1 billion.

Still the company is yet to match his final profit, for the 2005 financial year, and the 28c-a-share dividend handed down that year has remained the benchmark ever since.

The board split over plans pushed by Switkowski, and then chairman Bob Mansfield, to move into new and old media via mooted acquisitions of Fairfax Media and the Nine Network. Switkowski wanted to combined his Sensis division with Fairfax and create a digital superpower, but his dream was not supported by the board. As things turned out, both companies have had better days.

The highly political Telstra board split in March 2004 and Mansfield stepped down to be replaced temporarily by John Ralph, who was in turn replaced by Don McGauchie later that year.

Switkowski was given notice in November and he was formally replaced by Sol Trujillo in the middle of 2005.

Trujillo went on a spending binge and upgraded the company's technology with its state-of-the-art Next G mobile network, which ironically enough is a reason some argue the NBN doesn't have to be as pervasive as the previous government had planned.

He and McGauchie also had a poisonous relationship with the government.

Now that David Thodey and Catherine Livingstone have restored that relationship, Switkowski's move to NBN Co could well bring the two sides closer together.

That prospect will face a revolt from rival telcos and will have to be managed very closely by the government, lest the benefits of structural separation are thrown away.

Floating names

ONCE upon a time, IPO pitches were boosted if you could spruik the fact you had the gun analyst in the team to ensure a good following and, of course, independent quality research.

The dismal Myer float four years ago put that theory to bed in that all the float team analysts, except Merrill Lynch, had price targets well north of the float price of $4.10 a share.

History suggests Myer might cross that threshold some time in the year 2020, but it has yet to match its float price.

Reports yesterday suggested Anchorage has appointed Macquarie and Goldman to advise on the potential float of its newly acquired Dick Smith, which was given to it by Woolies.

The float will probably be ranked as a small cap deal, and both houses have analysts in that field, including Goldman's George Batsakis and Macquarie's Adam Simpson.

But Macquarie's retail analyst Greg Dring finally left the building last Friday, which means he won't be on board to spruik the stock and there is no word yet on who may fill his shoes.

Sims' success

WHEN Rod Sims assumed the top job in the ACCC just over a year ago, one of his stated objectives was to clean up the conduct of door-to-door salespeople.

Yesterday's Federal Court action against Australian Power and Gas for allegedly misleading and unconscionable conduct probably marks the last of the attacks on the industry, which so far have recouped more than $3 million in fines. The watchdog's action on EnergyAustralia is still before the court, but now most of the incumbents have stopped door-to-door sales.

This is part of the trouble, because the big guys don't need to knock on doors to drum up business, they just throw big incentives to intended customers through highly effective newspaper advertisements.

Sims isn't worried about door-to-door sales per se, just when the door knockers behave badly.

As events pan out today, the aforementioned Sims is expected to clear AGL's $75m AP&G takeover. The two issues are clearly separate. The merger test centres on its impact on competition and few see any danger in the ACCC rejecting the deal, even though the big three providing power to NSW are close to an almost cosy relationship.

AP&G comes complete with 350,000 customers and, with it, arguably, a ceasefire in the bitter marketshare battle in NSW.

Some argue the deal shows a state of some desperation from AGL, given AP&G dropped $8m last year and the quality of its customer loyalty may be questionable.

NSW Treasurer Mike Baird has helped engineer a moderation of network price rises, and through that has helped reduce the level of market-share churn.

By contrast, in Queensland, where power prices are rising very quickly, churn also is increasing rapidly.

Wait for it

THE ACCC has somewhat belatedly listed the Asciano $93m purchase of Newcastle-based logistics firm Mountain Industries.

The deal was unveiled in July but was listed on Tuesday with a decision due by end of next month.