Deane 'liberated and relieved' to be leaving Telecom

Wayne Boyd and Rod Deane

Telecom chairman Rod Deane will quit at the end of this month, making way for a successor to reshape New Zealand's largest listed company.

A shake-up of the board and the executive team led by Theresa Gattung, and a potential break-up of the company into a retail services company and another selling network services, is now firmly on the agenda.

Dr Deane, 65, who will get a golden handshake of pension entitlements worth at least $660,000, told the Herald he "felt liberated and relieved" to be leaving the company he joined as chief executive in late 1992.

Telecom needed new leadership after the Government decided to open the company's network to competitors, he said.

The measures, which wiped more than $2 billion from Telecom's market value after they were leaked before last month's Budget, are designed to make cheap high-speed internet access more available.

"When the regulatory announcements were made I said to the board I do not think I can continue. I do not enjoy managing commercial enterprises where there is heavy-handed regulation," Dr Deane said.

Auckland International Airport chairman Wayne Boyd, 59, will take up the $400,000-plus a year role on July 1.

Mr Boyd was brought on to the board in 2004 with a view to succeeding Dr Deane. He pips Business Roundtable chairman Rob McLeod, who also joined the Telecom board two years ago.

Dr Deane is also giving up his chairmanship at ANZ National Bank and Te Papa.

Another Telecom director, Paul Baines, also leaves the board on June 30.

Investors last night welcomed Dr Deane's decision and are now looking for further changes. They are furious that Dr Deane, Ms Gattung and the rest of senior management were caught off guard by the Government's plans to open up the network.

Ms Gattung, who last year earned $2.9 million, is in the most tenuous position, especially since a transcript of her colourful comments to a March investor conference emerged.

She said then that the Government was too smart to do anything so "dumb" as opening up the network to competitors.

She also admitted that Telecom used confusion as a marketing tool, a comment that was seen as breaking trust with the customers.

Dr Deane's departure will also increase Ms Gattung's vulnerability. She rose up the ranks under his watch and was appointed chief executive after Dr Deane became chairman in 1999.

Investors say Dr Deane and Ms Gattung should also take responsibility for the loss of the mobile market share to Vodafone and Telecom's disastrous acquisition of Australian telecommunications company AAPT which has cost the company more than $1.7 billion.

Brook Asset Management principal Paul Glass said: "The first step will be for the chairman to look at the skills of the board.

"The new board will have to decide whether they have the right chief executive."

He said Mr Boyd was the right man for the job but he would have his work cut out.

The investor discontent contrasts with the early years of Dr Deane's tenure, when he was applauded at the company's annual meetings. As chief executive he reshaped the company and presided over a more than doubling in the company's shares.

His role at Telecom was the pinnacle of a career in the top tier of political and economic life in New Zealand.

Before joining Telecom he was chief executive of the state-owned Electricity Corporation of New Zealand, deputy governor of the Reserve Bank, an alternate executive director of the International Monetary Fund and chairman of the State Services Commission. Recently, he has presided over the remarkable recovery of Fletcher Building.

Competitors, who have long lobbied the Government to break Telecom's monopoly over the lines connecting homes and businesses to exchanges, also welcomed Dr Deane's departure.

They said Telecom could not change until it got new leadership.

"It's inevitable [that Theresa Gattung goes next]," said one.

But one industry observer was worried that Mr Boyd's appointment might signal more of the same, since his role at Auckland Airport to a large extent involved keeping the Government in check.

"We would have preferred to see an entirely fresh face," the observer said.

Mr Boyd, who is chairman of state-owned generator Meridian Energy and transport group Freightways, and a director of investment house Forsyth Barr, said it was an honour to be taking Telecom into a new era.

"Telecom will be listening to New Zealanders about what they want and expect from the company."

- additional reporting: Phil Taylor, Peter Nowak