Telstra AGM more of the same

Angry Telstra shareholders were not placated by the chairman's call to 'accept reality' on its share prices at the company's lengthy and aggressive annual general meeting in Sydney last week.

In the AGM, which stretched beyond five hours, shareholders were told to expect no immediate change in the telecommunication giant's flat outlook for this financial year. Despite signs of growth returning to the telecommunications industry, Telstra shares were below $5, finishing at $4.82 on Friday November 14, well below the $7.40 paid by many shareholders as part of T2.

'After four months trading in the 2003/04 year, there is no change to our previous comments, reiterated at the recent Q1 results announcement, as to our outlook,' Telstra chief Ziggy Switkowski told shareholders. 'Our revenue growth remains less than industry growth at present,' he said. 'But we are confident in our strong cash flows. And our costs will track lower to ensure improved margins and that we are building shareholder value.'

'Our goal is to return Telstra to annual profitable revenue growth approaching 4 percent over the next two to three years,' Switkowski added.

Telstra chairman Bob Mansfield said the board 'acutely recognises' that Telstra's share price was only marginally better than 12 months ago. He said a 'growth element' was needed to lift the stagnant share price and 'to prevent simply being eaten away by regulatory and competitive realities in the marketplace'.

Telstra was working on initiatives to combat this, such as expanding broadband and wireless offerings and better exploiting Telstra intellectual property from its research laboratories, he said.

'It's simply not good enough to sit still and presume we will stay as successful as we are. To sit still, in the medium and long term, is to risk going backwards,' Mansfield said.

On the sale of the remaining Commonwealth stake, Mansfield said he looked forward to the day Telstra could be a 'normal' company, 'free of the political commentary and associated microscopic media attention that it is currently subjected to -– unlike any other company in the country'.

Meanwhile, shareholders aired gripes about Telstra's beleaguered Asian investments and a lack of inner-city ADSL connections.

Some expressed concern on the board's plan to allow the maximum aggregate remuneration of non-executive directors to increase by $170,000 to a combined $1.3 million per annum. More than one investor called for the resignation of both Mansfield and Switkowski.

Mansfield's suggestion that unhappy shareholders could sell their stock and move on stirred up more criticism.

'There's no compulsion on you to own shares if you choose not to do so,' Mansfield said.

 At this suggestion, one shareholder said Telstra director Sam Chisholm was the wisest director on the board. 'Do you know why? Because he doesn't have any Telstra stock,' he said.

The same shareholder accused Mansfield and Switkowski of having the investment smarts of schoolboys. Nine months ago Telstra wrote off its US$965 million investment in pan-Asia Internet infrastructure company Reach, a joint venture with

Hong Kong's Pacific Century CyberWorks (PCCW).

Despite dissent in the ranks, all the board's proposed amendments were passed, returning non-executive directors John Fletcher, Donald McGauchie, John Ralph and John Stocker for another three-year term on the board.

However, Mansfield said board members' pay would not rise this financial year.