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Telecom CFO resigns in fourth high-profile departure


Chris Keall
Tue, 18 May 2010


FEBRUARY 22: Steve Lowe, country manager for XT technology partner Alcatel-Lucent, abruptly departs
FEBRUARY 23: Telecom CTO Frank Mount carries can for duff XT upgrade
MARCH 25: Director of mobile Paul Hamburger, aka "Mr XT" resigns "for a mixture of professional and personal reasons"
APRIL 12: Telecom Wholesale boss Matt Crockett resigns to think about life
MAY 18: CFO Russ Houlden resigns to take position with FTSE 100 company

Others on the way out as Telecom moves to trim 200 management jobs include head of broadband Ralph Brayham,  branding and marketing head Craig Herbison and small business head Victoria Crone.

Telecom chief financial officer Russ Houlden has resigned, the company told the NZX this afternoon.

The CFO – an ex-pat who arrived with chief executive Paul Reynolds – has resigned to join a FTSE 100 company in his native UK.

Mr Houlden is the fourth high-profile exit this year following the resignation of CTO Frank Mount in the wake of the XT debacle; director of mobile Paul Hamburger choosing not to renew his contract; and the pending departure of Telecom Wholesale chief executive Matt Crockett.

And within Telecom's immediate orbit there has also been a headline departure, with Alcatel-Lucent country manager Steve Lowe abruptly exiting stage left on February 22.

Of the Telecom managers who have tendered their resignations, so far only one has been directly replaced: Mr Hamburger, whose shoes were to be filled by ex-Vodafone GM Kieren Cooney - or at least were until the executive cull kicked in.

Dividend debate
The CFO was most recently in the news at Telecom's third quarter update, delivered May 7, during which he announced an adjustment of the company's dividend to 90% of net profit for its 2011 financial year, or an estimated 17cps if earnings hit the forecast $360 million (its 2010 dividend of 24 cents will equate to a payout of about 110% of profit).

For local shareholders, it represented a continuation of the Telecom's famously fat payouts.

"17c fully-imputed [there was nil imputation in 2010] grosses up to 24c, so on a pre-tax basis - for New Zealand taxpayers - there would not actually be a reduction at all," Forsyth Barr analyst Guy Hallwright told NBR.

At the quarterly briefing, Mr Houlden acknowledged there had been a lot of debate among investors about the dividend payout, with some wanting it sliced to 75%.

Some thought it would be prudent to reduce the ratio while Telecom waited for the government to announce its Crown fibre decision, Mr Houlden said.

"Others favour a return to a 75% or lower payout ratio on the basis that paying unimputed dividends is not tax efficient," he added.

"Continuing to pay high dividends is pointless when they are not reflected in the share price," Mr Houlden said, as he continued to canvas opposition arguments for the benefit of assembled analysts (and, in hindsight, perhaps, those looking back on his tenure).

NBR would like to write that the CFO made the last two comments pointedly. But they were delivered with the same measured, neutral tones he employed for every public sentence.

Telecom shares (NZX: TEL) closed flat at $2.07, skimming their 52-week and all-time low.

Chris Keall
Tue, 18 May 2010
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Telecom CFO resigns in fourth high-profile departure