Telstra outlines strategy

Wednesday, 29 September, 2010

Despite Telstra's falling share price with the uncertainity of the NBN legislation still  hanging over the carrier, it has outlined its strategy to grow market share, simplify company processes, reduce operating costs and improve customer service.

“Telstra has an opportunity to grow thanks to an unmatched portfolio of products and brands, scale advantages, network and engineering skills, and a large customer base,” CEO David Thodey said.

“Our long-term growth strategy takes advantage of changes in technology, a growing sales and marketing-led culture and simpler company systems that lower our costs. The strategy must be implemented irrespective of the National Broadband Network.

“Over the next decade, we will also build long-term value for shareholders by leveraging these strengths and generating profitable new growth businesses. This will include opportunities here and in Asia, online and mobile content, and network-based applications and services.”

Thodey also reported growing sales momentum in July and August as consumers responded positively to recent price changes, new bundled offers, new products and customer service improvements.

In the first two months of 2010/11 the company:

  • Sold 165,000 bundled offers, bringing to 490,000 the total number sold since their introduction nine months ago.
  • Sold 64,000 T-Hub and T-Box services, bringing to around 100,000 the total number sold since the products were launched in April and June 2010 respectively.
  • Added 73,000 post-paid mobile subscriptions (compared to a net gain of 91,000 in 2009/10).
  • Added 32,000 fixed broadband subscribers (compared to a net loss in 2009/10) and 176,000 wireless broadband subscribers (compared to a net gain of 608,000 in 2009/10).
  • Lost fewer fixed-line telephony customers than for any two-month period since 2007.
  • Attracted 33% more unique visits to online content sites and 18% more unique visits to mobile content sites than a year earlier.

“There is growing momentum in the business as customers respond positively to the initiatives we have taken over the past nine months, including the introduction of competitive bundled offers, better value broadband plans and devices like T-Hub and T-Box,” Thodey said.

Over the past nine months, Telstra has improved the value of fixed and wireless broadband plans. The company has also introduced new pre- and post-paid mobile browsing packs, small business mobile plans, capped pre-paid mobile plans and bundled offers. It also launched the T-Hub fixed home phone and T-Box IPTV service, and expanded the Telstra Store network by 75 to 209 stores nationwide.

Customer service improvements have also contributed to growing sales momentum. In the past year, Telstra has introduced weekend technician appointments, scrapped charges for calling the company, linked employee performance-based pay to customer satisfaction, established a dedicated team to manage home movers, introduced a premium service to help customers install equipment or troubleshoot problems, and removed several ‘nuisance’ fees. These measures have seen a one-third reduction in complaints to the Telecommunications Industry Ombudsman, and a 4.6% improvement in customer satisfaction surveys.

Thodey also provided a detailed breakdown of a $1 billion investment - announced last month - to fund the company’s 2010/11 strategy to grow market share, simplify company processes and improve customer service.

The $1 billion investment will meet growing demand for mobile phone handsets, T-Box and T-Hub devices, develop new digital services for business customers, fund new network applications and services, conduct additional promotion and advertising, and simplify company systems.

“This strategic investment will help Telstra prepare for the future by taking advantage of new revenue streams, and utilises our recently upgraded IT systems and networks to further improve customer service and satisfaction,”  Thodey said.

Thodey also reassured investors that, based on current performance, the company could comfortably continue to pay shareholders an annual dividend of 28 cents per share should the board elect to do so in its regular reviews.

“The purpose of our strategy in 2010/11 is to improve the company’s long-term EBITDA and cashflow, which will underpin our ability to fund dividends in the future.”

Thodey concluded by outlining how Telstra will have changed in three years.

“Telstra will be faster and more customer-centric. We will have lower costs and higher productivity. We will have sales and marketing expertise to match our network and engineering experience. And we will have capitalised on profitable new growth businesses in media, international markets and network-based applications and services,” he said.

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