Mr Mansfield symbolised Telstra's adventurous strategy

Bob Mansfield said he could no longer tolerate divisions over strategy, as Telstra scrambles for ways to offset weak growth in its core markets.

The departure is seen as a blow for chief executive Ziggy Switkowski, a key ally of Mr Mansfield's.

Australian Prime Minister John Howard has already said that Mr Switkowski has his full support.

Radical departure

Tensions in Telstra's boardroom have been high since the company announced radical departures from its core telecoms business.

Telstra's core businesses are performing sluggishly

Two months ago, Mr Mansfield and Mr Switkowski reportedly propsed making an offer for media group John Fairfax Holdings.

The plan is believed to have been vetoed by other board members.

The company has also spent 1bn Australian dollars (US$735m; �410m) on classified advertising group Trading Post and technology services company Kaz Group.

Mr Switkowski is determined to diversify Telstra's sources of revenue: as a state-owned company, it is obliged to provide vital but unprofitable telecoms services to rural Australia, something it insists is a drag on its performance.

'Less risky'

Investors were cheered by the departure, hoping that a new chairman would pursue a more cautious approach.

"I think the market is speculating on the increasing probability that the company will revert more to utility-type behaviour, which would increase the cash flow to shareholders and make it appear less risky," said Invesco Australia analyst Luke Sinclair.