Paul O’Sullivan, ‘the Godfather’ of Optus apologises for network outage

Optus chair Paul O’Sullivan, who has worked at the company for three decades, has broken his silence on its disastrous network outage, which forced the resignation of the company’s chief executive.

“There’s no doubt that every one of us associated with the company feels we let Australia down two weeks ago,” O’Sullivan told this masthead. “Like everyone else, I apologise for what happened. We all know that outages like this shake confidence, and they really are not acceptable.”

Paul O’Sullivan, 63, is chair of Optus, ANZ Banking Group, Western Sydney Airport, and is a director of St Vincent’s Health Australia.Credit: Arsineh Houspian

O’Sullivan, who describes himself as “a godfather figure in the company”, says he initially learnt of the outage earlier this month via ABC News Radio. He said he had no plans to resign alongside Kelly Bayer Rosmarin. “I’m happy to continue in the role, but ultimately, that’s up to Singtel.”

Optus is responsible for nationally critical infrastructure, which O’Sullivan has managed in various roles, including when he was chief executive for eight years until 2012. He’s also served as an Optus director since 2004, and as its chair since 2014.

Kelly Bayer Rosmarin resigned on Monday after the network outage, which was triggered by a software upgrade at Optus’ parent Singtel but was ultimately blamed on the way the Australian telco failed to handle new routing information sent to it while the update was under way.

It left more than 10 million Optus customers, including some banks, government agencies and small businesses, without internet, telephone and e-payment services for at least 12 hours. The outage followed a cyberattack at Optus last year, which exposed the personal details of its customers.

O’Sullivan, 63, said he learnt of the outage via the media. “I was listening to ABC News Radio. I was in contact by phone that morning because I was able to use broadband and WhatsApp. I also have a backup SIM with Telstra. I was on the phone to Kelly and to others throughout. I’m not in the chain of command, so I wasn’t issuing orders. I was offering advice and support.

“If you look at crisis response, the chain of command would immediately go to all the people who are operational and who are required to be operational. It would not be unusual for me to be down the pecking order in the sense of who to contact.”

O’Sullivan said it was important to understand that the Optus chief executive and management report to the Singtel chief executive and board, not to the Optus board. The Optus board instead has statutory responsibilities such as work, health and safety issues and the financial accounts.

“That’s the sort of stuff that the local board is responsible for, it’s not an operating board in the sense of sitting regularly with management to review ongoing performance – that goes through Singtel,” said O’Sullivan.

“That’s why you’re seeing a less frequent set of meetings with the local board.”

The Optus board typically meets quarterly. The two crises at Optus have prompted government and regulatory reviews of the company, and also focused attention on its governance structure.

“I can say hand on heart that in my time as CEO I always felt I had autonomy.”

Paul O’Sullivan, Optus chair and a former CEO

O’Sullivan acknowledged suggestions that the Optus board should operate more like an ASX-listed company board. In 2022, Optus contributed more than half of Singtel’s group revenue and pre-tax earnings.

“I could see how that might provide more visibility and maybe more reassurance to local regulators and government. Would it be different in an operational sense, whether someone was ringing me or ringing the group CEO in Singapore? I’m not sure if it would make a lot of difference.”

A former Optus executive, who requested anonymity to speak freely on the issue, argued it should be reviewed. “This is a critical piece of Australian infrastructure. What level of control or protection should the Australian organisation have over its own operations? Most of the key decisions, supply choices, technical evaluations and implementation to do with network engineering, is heavily managed by its parent.”

O’Sullivan argued that in his experience the Optus CEO does have autonomy. “I can say hand on heart that in my time as CEO I always felt I had autonomy. But obviously, I did work with the group to try and be a good executive and leverage scale. I knew I could call on the group’s global expertise if I needed to, and I used to do that.”

O’Sullivan added that Optus was losing $300 million when Singtel bought it in 2001. Since then, he says they have invested $40 billion. “We’ve got the benefit of leveraging their scale. We’ve got the benefit of their balance sheet.”

He was also supportive of Singtel’s chief executive Yuen Kuan Moon, who has also come in for criticism of the recent outage. Yuen, who graduated with first-class honours in engineering at the University of Western Australia, has worked at Singtel for three decades, and became its head at the start of 2021. He’s well-regarded by his peers, according to telecommunication industry experts.

Yuen was in Sydney during the outage, reporting Singtel’s first-half earnings. The company’s underlying net profit was up 12 per cent to $S1.12 billion in the six months to September 30.

Since he was appointed, Yuen has been simplifying Singtel by divesting businesses and strengthening the company’s financial position. “The group CEO is very experienced, I’ve worked with him over many years,” said O’Sullivan.

Next Optus CEO

Last year, O’Sullivan gave a statement to the Australian Competition and Consumer Commission about his own experience. It was during the regulator’s review of a proposed tie-up between Telstra and TPG, which Optus opposed. According to O’Sullivan, his roles at Optus gave him a “detailed understanding of the business, including the technical operation of the network”.

Optus boss Kelly Bayer Rosmarin resigned after the network outage, which was the second crises the company suffered in 13 months. It was the subject of a cyberattack last year. Credit: Alex Ellinghausen

Optus’ management were criticised in both crises, but particularly the network outage, for being slow to respond, showing poor accountability and lack of transparency, which drew a backlash from retail, business and government customers, and politicians across the aisle.

Bayer Rosmarin appeared before a Senate committee last Friday, where she was grilled over the outage failure, before resigning.

“I’m not a key decision maker in that process because the CEO is appointed by Singtel. I have an advisory role”

Paul O’Sullivan, Optus chair and a former CEO

O’Sullivan, 63, who studied economics at Ireland’s Trinity College and later was a Harvard Business School management graduate, has held various leadership roles within Optus, including chief operating officer and chief executive. He has worked as an executive for Optus’ parent Singtel, and also served on the boards of other Singtel subsidiaries in India and Indonesia.

“The chair’s role at Optus is quite different to the other chair roles. It’s not a listed company. The heavy lifting is done effectively at the Singtel group board and Singtel group and its committees.

“What you don’t want to do in a role like mine is create confusion. So you’re very selective about when you might offer an opinion. Otherwise, the chief executive’s got opinions coming from all sides. I’m very sensitive and conscious of that. But absolutely, I do provide advice and opinions. It’s up to the CEO what they choose to accept. I’ve got a clear role in terms of the local subsidiary, but the CEO doesn’t report through to me.”

O’Sullivan said that also means he wouldn’t be deciding the next Optus CEO, even as a global search to replace Bayer Rosmarin is underway. “I’m not a key decision maker in that process because the CEO is appointed by Singtel. I have an advisory role.”

O’Sullivan is a busy director. He also chairs ANZ Banking Group, the Western Sydney Airport group, and is a director of St Vincent’s Health Australia.

The Western Sydney Airport group is developing the $5.3 billion international airport, another critical piece of infrastructure, which is slated to begin operating at the end of 2026.

Earlier this month, ANZ reported a record full-year cash profit of $7.4 billion, up 14 per cent. However, ANZ’s share price fell on the day of its profit report as the sharp deterioration in retail banking margins spooked investors.

ANZ has led an aggressive mortgage war, which has been criticised by its banking peers as being value destructive, and compared with the 2011 National Australia Bank “break-up” campaign, which failed to deliver for NAB.

ANZ is also currently appealing a knockback by regulators on its proposed $4.9 billion bid for Suncorp’s banking arm, which would help it regain the 2 per cent market share in mortgages that it has lost in the past few years.

“ANZ is my only listed company, and obviously that is a significant responsibility,” said O’Sullivan. “I do chair a government business enterprise building the new [Sydney] airport, which provides some synergies because it allows me to work closely with the federal government.

“I’m very conscious of my time commitment. If you look at my attendance record, and at the performance of the organisations that I have a true chair role in, they’re doing well.”

ANZ might be the only “true” chair role for O’Sullivan, but for the past year, its arguably Optus that has required the most attention.

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