The former head of French mobile company Orange, Solomon Trujillo, has been appointed Telstra's new chief executive officer (CEO) for a fee of $3 million a year.

Telstra chairman Donald McGauchie said in a statement this afternoon that Trujillo will officially take up the position on July 1 replacing the former boss Ziggy Switkowski.

The 53-year old American will be moving from Califormia to take up the role and his fixed remuneration package of $3 million a year, is above the $2 million paid to Switkowski.

He will also receive an annual long term incentive of up to the value of $4 million if he meets certain performance targets.

Trujillo will receive an initial sign on payment of $1 million and 50 per cent of his first year incentive on commencement.

"We believe he well and truly meets the exacting criteria set down by the board for the task ahead," McGauchie said.

"We unanimously agree that he is the best person to lead Telstra and believe this is an excellent outcome.

"During his career he has successfully managed fixed line, wireless, broadband and directory businesses - virtually every facet of Telstra's business.

"He has enormous depth, expertise and understanding in matters regulatory, operational, financial, marketing and sales and a deep understanding of technology."

McGauchie said Trujillo will drive cultural and organizational change in the company as he has successfully led a number of business change programs in the past.

Until recently Trujillo was the head of Orange and has 30 years experience in the telecoms industry.

He began his career at AT&T in 1974 before joining Mountain Bell Telephone which became US West.

At that company Trujillo rose through the ranks to become chairman in 1998 before it merged with Qwest Communications.

Before joining Orange, he was CEO of high tech start-up Graviton and has served as an advisor to the US government on trade policy.

He has a strong mix of public and private sector experience.

Well known for his strong political ties, Trujillo also holds board positions at Pepsi, Target and the newspaper group Gannett.

He will have to leave all but one of his three directorships to take up his new role.

Trujillo has an MBA from the University of Wyoming and has honorary doctoral degrees from the universities of Colorado and Wyoming.

Federal Communications Minister Helen Coonan and Finance Minister Nick Minchin welcomed the announcement.

Trujillo takes the reins as the federal government continues work on its scoping study into the possible sale of its remaining 51.8 per cent shareholding in Telstra.

"I look forward to working closely with Trujillo as Telstra and the government address these important issues in the months ahead and over the longer term," Senator Coonan said.

Senator Minchin said Trujillo was a highly regarded chief executive with deep knowledge and understanding of the telecommunications industry.

"Solomon Trujillo has an impressive record in the global telecommunications industry and Telstra will benefit from his extensive experience and leadership skills as the company enters a critical phase in its history," he said.

"Trujillo has a proven track record in delivering services to customers, returns to shareholders and maintaining a constructive relationship with regulators."

Senators Minchin and Coonan thanked outgoing Telstra chief executive Ziggy Switkowski for his work in the company's top job since his appointment in March 1999.

Prime Minister John Howard said irrespective of Telstra's sale timetable, "we needed to find a new chief executive".

Telstra has been searching for a replacement for more than seven months after the board pushed Switowski out the door in December.