KEY POINTS:
Telecom chief executive Theresa Gattung follows her mentor Roderick Deane as the latest fall guy for a series of misjudgments at New Zealand's largest listed company.
Deane took the bullet for Telecom's failure to manage the company's strategic response to clear signals from the Labour Government that it wanted big changes to its monopolistic practices which kept competitors at a disadvantage.
Telecom's practice of stymieing open competition on the copper loop angered cabinet ministers who had come to believe that was the real reason why greater broadband uptake was not taking place in New Zealand.
That Deane was just doing what he was himself required to, putting the interests of Telecom's shareholders first, sailed over minister's heads.
A more adroit response might have been to open negotiations with the Government and persuade ministers the Government should buy back Telecom's hardwire network at a suitable price which would have been used to compensate shareholders.
Cabinet ministers could then have either put the network into a publicly-owned company on which the competing telcos could play, or, recoup funds by selling it into club ownership.
But the moment in time was lost. Deane resigned as millions of dollars were wiped off Telecom's shareprice in the wake of the Government decision to wipe the company's effective monopoly. Once he announced his resignation it was only a matter of time before Gattung's would follow.
Gattung, a self-confessed extrovert, was at her best when she was the marketing guru who drove the telco's public image.
But the woman who once confessed to a Sydney luncheon that she had a "dangerous tendency to think out-loud" played her own part in bringing the Government to the brink when her ill-chosen frankness over how telecos used "confusion" to bamboozle their customers, proved the last straw for ministers who had started to believe Telecom was using such a stratagem to persuade the regulator to protect its patch.
The company's decision to outsource what had previously been considered core business - building and maintaining networks - in favour of the clear push towards transforming Telecom into a "communications" company with a strong marketing emphasis, also played a part.
If Telecom was prepared to outsource the very part of its business that cabinet ministers believed was the core platform for greater broadband penetration, how much attention was it really paying to the need to further invest and develop the network for the greater good of New Zealanders?
This might sound a bit far-fetched. But many of the politicians that I've discussed the company's plight with over the past year or so, had become concerned that the network - which was originally built using tax-payer funds - had suffered from a lack of capital investment once Telecom shifted from being a state-owned enterprise into private ownership.
Once Gattung started to talk about how Telecom saw its future as a communications provider - the counter-factual question over just who should be the network provider began to be asked. It should still continue to be asked.
Profit-driven corporates, particularly those controlled by offshore shareholders who came onto the share register at the right time to pick the low-hanging fruit that was available when a state-owned monopoly was transferred into private ownership, have a clear interest in staving off the time when they lose monopoly rents. That time has passed and with it those who made an art form - in their shareholders' interests - of keeping regulators at bay.
Where does Gattung go next?
She's on the hunt for another senior business role.
She'll have no difficulty in getting a berth, and, given her past track record would be prepared to swap sectors if she can't get another slot in the telecommunications or communications sectors which are undergoing rapid convergence.
A regular attender at Microsoft founder Bill Gates' annual chief executives' retreat, Gattung is a known quantity on the US scene. She's made it on to the lists of the most powerful business women. She is mobile, she has no children or a partner to worry about. But the international environment could be more difficult than she's faced to date.
At Telecom she was initially protected by Deane, who took the radical step of sponsoring a young 36-year-old - who also happened to be a woman - as his successor. That Deane stayed on at Telecom with his own office - and (for a while) a $600,000 plus salary - was an indication that his chairmanship was much more integrated with the company's operations than is usual in the New Zealand context. It was sometimes criticised (but not too openly) as Deane deciding to exert a strong oversight while his protege was still in her training wheels stage and performing more like a chief operations manager than a CEO.
That seems a tad unfair.
It was more likely a move to meet the demands of US shareholders, who play in an environment where the roles of chairmen and chief executive are combined.
What Gattung does do well is passion - and motivation.
Like a number of young NZ CEOS she got behind the Knowledge Wave initiatives and also served on Prime Minister Helen Clark's Growth and Innovation Advisory Board.
But that was not sufficient to appease the Government when the chips were down.
