IF you believe mainstream media, Sol Trujillo is the most unpopular man in Australia and Telstra is the most unpopular company [full disclosure: I am the beneficiary of a Telstra shareholding]. I don’t think I’ve ever forgiven Telstra for its monopolistic behaviour back when it was Telecom and I didn’t have a choice of carriers.
When Telstra was booted out of the National Broadband Network tender process for submitting a non-compliant tender, pundits were eagerly predicting Telstra’s demise or other “dark and awful consequences”. Telstra had submitted a tender that suited their business model, aspirations and view of the future. They signaled the only way they’d consider lining up for the $4.7 Billion AUD the government was offering. I congratulate them for having the balls to stick to their guns.
Today the Federal Government announced none of the remaining tenders were “value for money” and instead would form a new company to build a fibre to the home network to 90% of Australians. Much ink will be spilled in the future on this deviation from the tender outcomes requested, namely 98% fibre to the node.
Here’s my quick take home analysis:
- Submitting a tender of this size and complexity is a very expensive exercise.
- No tenderer was awarded a contract despite complying with the guidelines.
- Telstra spent a little money outlining the conditions they would accept.
- Who looks smart now?
This seems like a brilliant use of game theory by Telstra. Sol and his team have been called arrogant and out-of-touch, I think they protected their shareholders interests well.
Just because a deal is on the table doesn’t mean it’s always wisest to take it.