Could David Thodey beat Craig Dunn to be Telstra’s next chair?


When Andy Penn succeeded Thodey, he was critical of that $11 billion deal, even though he shared responsibility for it. Penn was chief financial officer when the NBN deal was done, and took over from Thodey in 2015.

Telstra’s shares hit $6.60 just before Thodey departed in 2015. It was that year that the share price started to decline, after the NBN rollout, and it’s never recovered those highs. The stock is trading around $4 a share.

Craig Dunn has been on Telstra’s board since 2016, and was re-elected last October for another term, with a resounding vote in favour from shareholders. He’s chair of Telstra’s audit and risk committee, and is understood to have backed Brady’s nomination as CEO. He’s also chair of the Australian Ballet, and a director of brewer Lion.

Ming Long, the former chair of AMP Capital, and a director of IFM Investors and QBE, joins Telstra’s board in January.

Vicky Brady is considered a safe pair of hands, who is unlikely to change course on Penn’s T25 strategy, which includes the partial sale of Telstra’s infrastructure arm- InfraCo, which is made up of the telco’s data centres, optic fibre, ducts, pipes and fixed network sites.

Telstra started structurally separating parts of its business in 2021, with the 49 per cent sale of its mobile towers, Amplitel, for $2.8 billion, which represented an enterprise multiple – a ratio used to determine the value of a company – of a hefty 28 times.

While Brady’s focus may be on the upcoming ruling that the ACCC will make just before Christmas on the proposed Telstra-TPG tie up on some mobile towers and spectrum, her first big test as CEO will be InfraCo. She will be judged on how she structures and executes a 49.9 per cent sale of that business, and it’s success in creating ongoing value for Telstra.

Telstra CEO Vicky Brady’s first big test will be how she executes the partial sale of InfraCo.Credit:Fairfax Media

Analysts have valued InfraCo between $23 billion to a very bullish $30 billion. If half of it was sold, reaping InfraCo $15 billion at the top end, then Morgan Stanley expects Telstra would pay down between $2 billion to $3 billion in debt, undertake a buyback and lift its dividend.


Morgan Stanley also expects that a partial sale of InfraCo would mostly likely be to a consortium of superannuation funds, as was the case with Amplitel, or it could involve private equity. Either way the buyers for InfraCo are likely to be limited for security reasons to the countries that fall within the ‘five eyes’. A partial stockmarket listing for InfraCo is not out of the question.

The challenge for Brady and her team is that the bullish valuations for InfraCo will be very tough to realise in 2023. The world is reeling from multiple shocks driven by the disruption to supply chains caused by COVID in China, and the war in Ukraine that has led to soaring global energy prices and inflation.

The uncertain global economic outlook for next year, with fears that America and the United Kingdom could enter recession, has led to volatile debt and equity markets. Such an environment means fewer buyers for InfraCo compared to when the deal was done on Amplitel. During such challenging times a CEO needs the sounding board and support of the chair. Whether that’s still Mullen, Dunn or potentially Thodey remains to be seen.

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