Home Telecoms & NBN Telstra looks to mobile, investment and cost-cutting to grow

Telstra looks to mobile, investment and cost-cutting to grow

Telstra looks to mobile, investment and cost-cutting to grow Featured

Telstra hopes to increase its mobile customer base, up strategic investment and cut back on costs as it gears up to become "a telco of the future", according to a presentation made by its chief financial officer, Warwick Bray.

"Our strategy to achieve our vision is to: deliver brilliant customer experiences; drive value and growth from the core; and build new growth businesses close to the core," Bray told the Macquarie Australia Conference in Sydney on Wednesday.

He said Telstra had reshaped its customers' NBN connection experience by upgrading almost a million to 50Mbps speeds for no additional payment. The company's smart modems made diagnosis of issues and moving premises easier, reducing support costs.

He said the company's mobile customer base had been on the increase for the last 20 halves, despite the competition.

Telstra, Optus and Vodafone have roughly the same number of mobile subscribers, with Telstra's advantage being in rural and regional areas. In a crowded market, many MVNOs are coming on-steam and reselling services from the big three. Additionally, Vodafone has the advantage of being able to offer better and cheaper roaming services.

Bray said Telstra had increased its investment in its multi-brand strategy with the launch of Belong Mobile in September last year.

"In the fixed market, we continue to perform well in NBN with new connections in the half year taking our market share to 51% excluding satellite," he told the audience.

"We are pushing hard and seeing strong momentum in our productivity programme where we delivered $249 million decline in underlying core fixed costs in the first half. We continue to expand and deepen our network leadership in conjunction with the long-term strategic investments that we are making.

"More than 92% of the Australian population have access to double the mobile speed of our original 4G through 4GX. Our 4G technologies cover 99% of the population."

Telstra has been making moves to improve its mobile offerings. For example, yesterday Australia's biggest telco announced an unlimited data plan for $70, only to see it undercut by Vodafone which offered a similar plan for $60.

Last year, Telstra took a big hit to both its revenue and profits for the financial year 2017 compared to the previous year, with income down nearly 5% and profits down by nearly 33%. The company blamed discontinued businesses like Autohome for the bad showing.

Bray said the company had seen strong demand for its cyber security offerings and had opened security operations centres in Sydney and Melbourne.

"We are investing in two new subsea cables with connections from Hong Kong to the west coast of the US, as well as the Indigo consortium connecting Perth, Singapore and Jakarta. This investment will support growth in our global connectivity business.

"Our Australian leading Internet of Things business continues to be a source of new growth as it is nearing $200 million in annual revenue," he added.

In February, Telstra announced that it would take a $273 million hit to its intelligent video business Ooyala, writing down the value of the business to zero.

Bray said the expected negative impact to Telstra's recurring EBITDA had been estimated in May 2016 to be between $2 billion and $3 billion, with an update in August 2017 that this figure would be nearer the higher one.

"Of this $3 billion recurring NBN impact, we have cumulatively absorbed $870 million to the end of the last half. This ongoing economic impact will ramp up in the short term given the accelerated profile of the NBN rollout.

"Against this NBN background, mobile is the single biggest influence on value for the company today, for both upside potential and downside risk."


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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.


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