No nod for Rod: Telecom fails to make Vodafone Hutchison Australia board
Rod Snodgrass is one of three Hutchison directors culled as the merger - and with it Telecom’s stake in the company that will trade as Vodafone Australia - is finalised. The composition of the board still throws up some intriguing links.
Having cleared its last regulatory hurdle, the merger of Hutchison and Vodafone’s Australian operations was formalised on Wednesday, and documents are now being filed with the ASX.
With the deal, Telecom’s 10% stake in Hutchison Telecommunications converts to a 5% stake in Vodafone Hutchison Australia, which will retain rights to Hutchison’s “3” name for transitional purposes but use Vodafone as its lead brand.
Chief executive Paul Reynolds stopped short of telling NBR his company was fighting for its Hutchison board seat - held by group strategy director Rod Snodgrass (pictured) - but did offer that he would "do everything possible to make sure Telecom’s investment is properly represented”.
Just ahead of the merger’s finalisation, Hutchison director Kevin Russell resigned, leaving eight Hutch directors vying for five spots on the merged board (the smaller Hutch is paying Vodafone $A500 million to equalise the two companies’ stakes in the merged entity).
Analysts said Telecom was in with a shot - albeit a long shot - given that Telecom had an ongoing commercial relationship with Hutchison that transcended its ownership stake.
Further, both Vodafone and Hutchison had indicated there would be an emphasis on independent directors - and surely no one could have such an independent voice against Vodafone Hutchison chairman Nick Read (the boss of Vodafone New Zealand chief executive Russell Stanners) than Telecom’s Mr Snodgrass.
However, it can be revealed today that Mr Snodgrass has not made the cut.
The make-up of the Vodafone Hutchison board has yet to be publically filed with the ASX, but NBR understands it will be:
Nick Read is Vodafone’s regional chief executive for Asia Pacific and the Middle East, and numbers Vodafone New Zealand country manger Russell Stanners among his direct reports.
Mr Read will serve as chairman of the merged company.
Hutchison boss Nigel Dews will be chief executive.
Vodafone Australia chief executive Russell Hewitt (a Kiwi ex-pat and one-time boss of Hewlett-Packard’s New Zealand operation) will serve on the board, but will not have a management role (see full management line-up at the end of this story).
Vodafone Hutchison Australia will have annual revenue of around $A4 billion, with 27% market share, be and be the country’s third largest telco behind Telstra and Optus.
In terms of mobile customers, Telstra has around 9 million, Optus 7.6 million, and Vodafone Hutchison 6 million (4 million from Vodafone, 2 million from Hutchison).
Paul Budde and other analysts tell NBR they expect Vodafone Hutchison to expand into landline voice and broadband to give the new company more traction against Telstra and Optus as the new-look market, with its condensed number of players, becomes more about scale (which could spell trickier times ahead for Telecom’s more mainstream Australian investment - its fully-owned subsidiary AAPT).
Telecom originally bought into Hutchison Telecoms - the ASX-listed subsidiary of Hong Kong-based Hutchison Wampoa - for $A400 million in 2000 at the height of the tech boom.
Telecom figured it could tap Hutchison’s expertise, and buying power, as it transitioned its mobile network from CDMA to 3G.
In the final event, Telecom and Hutchison did not co-operate on XT.
Telecom still carries its Hutchison stake on its books at its full cost, although it is only worth around $A150 million today.
Dr Reynolds has told NBR he thinks the merger will add value to Telecom’s investment. ABN Amro Craigs analyst Geoff Zame describes it as a “windfall”.
Vodafone Hutchison’s senior management team
While Nigel Dews (right) scores the top job over Vodafone Australia chief executive Russell Hewitt, Vodafone lands many of the key roles, and wins a couple of power tussles. For example, Hutchison director of sales and marketing Noel Hamill sees his role narrowed to sales and distribution.
Nigel Dews (Hutchison), Chief Executive Officer
Dave Boorman (Vodafone), Chief Financial Officer
Andy Reeves (Vodafone), Chief Technology Officer
Grant Stevenson (Vodafone), Director of Integration
Greg Bourke (Hutchison), Director of Human Resources
John Casey (Vodafone), Director of Marketing
Louise Sexton (Hutchison, Group Executive, Legal and Regulatory
Michael Young (Hutchison), Director of Customer Service and Experience
Noel Hamill (Hutchison), Director of Sales and Distribution
Tanya Bowes (Hutchison), Director of Communications and Corporate Affairs
Zac Summers (Vodafone), Director of Strategy and Business Planning