Deane's early exit likely to set off shake-up

Roderick Deane

Telecom chairman Roderick Deane looks set to relinquish the helm of New Zealand's largest listed company in short order, setting the stage for a further shake-up of top management, market sources say.

Amid mounting pressure from major shareholders over Telecom's failure to anticipate the Government plan to open up the network, Deane is expected to step aside well ahead of the company's annual meeting in October.

He is, however, expected to remain on the board until the meeting, when he will cut ties with the company he has led in roles including chief executive and chairman since 1992.

Deane has so far only said that he will give up his position within a year, reflecting his long-standing desire to reduce his directorships.

He is also giving up his seat on the board of ANZ Banking Group and the chair of ANZ National Bank.

He will remain as Fletcher Building chairman and as a director of Woolworths in Australia.

He was not available for comment yesterday but on Sunday he told the Business Herald: "I think it's time for a change and this will provide an opportunity for refreshment." But in a parting shot he added the Government regulation of banks and telecommunications was "rather distasteful".

A Telecom spokesman said last night: "Roderick has made his position clear and we do not wish to add anything to that."

It is not yet clear who will replace Deane, but observers believe Auckland International Airport chairman Wayne Boyd is the leading contender now sitting on Telecom's board.

Another possibility is Rob McLeod, also chairman of the Business Roundtable. However, observers say his links to the business lobby group - a harsh critic of the proposed measures - make him an outside contender.

In a package due to be introduced to Parliament shortly, the Government will force Telecom to give competitors access to the copper-wire lines between telephone exchanges and homes and provide financial details of its network operations.

It has also indicated it could yet force the company to separate itself into a retail and network operation and bring greater competition to the mobile market.

Since the detail emerged, Telecom's shares have plunged from $5.55 to $4.47 at close yesterday, a drop that has wiped more than $2.1 billion from its market value.

Shareholders are astonished that Deane and senior management were caught off-guard by the plan.

In March, chief executive Theresa Gattung said the Government would not be "dumb" enough to regulate and chief financial officer Marko Bogoievski also said regulation was not on the agenda.

Shareholders said last night that it was appropriate for a new chairman to be appointed before any moves on the executive team were made.

But pressure for Gattung and perhaps other senior management to take a fall for the failure is rising.

At least one institutional fund manager will be asking the company to find a new chief executive.

Meanwhile, Shane Solly, of Goldman Sachs JBWere Asset Management, was less specific but his message was clear: "If these guys were All Blacks, they would be ditched."

Wayne Stechman, equities manager of Tower Asset Management New Zealand, said pressure on the management would mount.

Guy Elliffe, of AMP Capital Investors, said Telecom's disastrous foray into Australia with its investment in AAPT and the failure to anticipate the Government's regulatory moves were mistakes. But, he added, "There is a lot of management capability that we would be very sorry to see go".

* ANZ National Bank said yesterday that former New Zealand Dairy Board chairman Sir Dryden Spring would replace Deane as chairman of the bank.