Reynolds' future unclear

Paul Reynolds will be chief executive of "New Telecom" after Chorus is spun-off, halving the size of the company, Telecom confirmed today.

The announcement leaves investors little the wiser.

Dr Reynolds told NBR on May 24 - the day Telecom's Crown Fibre contract was made public - that he would stay on at least through the "complex" structural separation process.

Telecom chairman Wayne Boyd reiterated Dr Reynolds' May 24 comment today, telling media that chief executive would head "New Telecom" during its "establishment phase" - but offered no detail on whether the Scot would stay beyond that.

A Telecom spokesman told NBR, "I can’t comment on length of tenure as that is a matter for Paul and the board, naturally" (Reynolds himself is on the board, but will presumably recurse himself from discussion on his future.)

It is, of course, also a matter of whether Dr Reynolds will seek long term contract from the board.

So far, he's declined to say if he wants to stay on beyond the transition.

Earlier, the chief executive told NBR he had not “spent a moment reviewing my career plans."

Pay gap
According to the company's 2010 annual report, Dr Reynolds had a total remuneration of around $5 million last year.

Chorus chief exectuive Mark Ratcliffe - who will lead the spun-off network division, expanded to include Telecom Wholesale - earned a base salary of $630,000. He also received a $598,805 bonus, plus a $205,000 incentive which will be paid if targets are met this year.

Analysts have speculated that Dr Reynolds might not want to lead New Telecom which, in terms of revenue, will be roughly half the size of the current company. Mr Boyd reportedly said it could not be assumed Dr Reynolds would take a pay cut. Mr Ratcliffe will, presumably, be asking for a rise.

Possible internal candidates to replace Dr Reynolds, should he depart, include Telecom Retail chief executive Alan Gourdie, and Gen-i Australasia chief executive Chris Quin.

Telecom's split - a condition of its Crown Fibre contract - is subject to debtholder and shareholder approval. Dr Reynolds has said that a vote will take place before the end of this year.

The company's shares [NZX:TEL], which have risen off a 52-week low of $1.94 this year as details of the Crown Fibre situation have become more concrete, closed up 0.95% in to $2.65.
 

THE SIZE OF IT: TELECOM 2010 RESULTS BY DIVISION

Divisions that will likely fall into the Telecom retail company - aka "New Telecom" post-split

• Telecom Retail (© Copyright Protected - The National Business Review 75)(includes copper landlines, mobile phone services, retail broadband): Revenue: $2.08 billion, ebitda: $396 million

• Gen-i (IT and telecommunications services): Revenue: $1.45 billion; ebitda: $225 million

• AAPT (Australian subsidiary): Revenue: $1.06 billion; (© Copyright Protected - The National Business Review 48)ebitda: $136 million
 

Divisions that will likely fall into the Telecom retail company post-split

(Likely to be called Chorus or Chorus Fibre; Telecom has reserved both names with the Companies Office)

• Chorus: Revenue: (© Copyright Protected - The National Business Review 33)$1.03 billion, ebitda: $754 million

• Telecom Wholesale (includes Telecom International): Revenue: $1.29(© Copyright Protected - The National Business Review 99)billion/ebitda; $226 million

Source: Telecom Annual Report 2010