Australia's Telstra names new CEO

Australian telecoms giant Telstra on Friday named a company insider to replace its outgoing chief executive in a move seen as aimed at healing a rift with the government.

David Thodey is to replace Sol Trujillo, the company said in a statement, adding that chairman Donald McGauchie will also step down and quit the board, to be replaced by director Catherine Livingstone.

Telstra and the government regularly clashed publicly during the reign of Trujillo and McGauchie, most recently over tactics which saw the company dumped from the tender process for a national broadband network.

Trujillo, a US citizen, announced in February that he would quit at the end of June. Analysts said his New Zealand-born replacement Thodey is well regarded by the market, having led the group's enterprise and government divisions.

"Telstra's strength and ongoing performance are the paramount priority," McGauchie said on Friday.

"It is my view that speculation on my tenure was a distraction to the business. Nothing should be allowed to get in the way of David (Thodey) and the management team getting on with the important job ahead of them," he said.

Thodey joined Telstra in 2001 from IBM, where he was head of Australia and New Zealand operations

"Our strategy remains unchanged: to continue to provide customers with world-class products and services," he said.

"The key to Telstra continuing to win and to serve customers will be finishing our transformation that started nearly four years ago."

Analysts said Thodey faces a number of challenges, with many hoping a key priority will be rebuilding bridges with the government.

Telecommunications analyst Ivor Ries of Baillieu Stockbroking said Thodey's style would be vastly different to that of Trujillo.

"Mr Thodey is very well known in political circles as a conservative, restrained person, more of a diplomatic kind of a guy," Ries told ABC radio.

"You're certainly not going to see confrontations with governments. His biggest challenge is building bridges with the government and sorting out the broadband mess," he said.