Telecommunications giant Telstra has announced a new program that will benefit both the company's growth and its customer base. Paul Budde reports.
LAST WEEK, Telstra CEO Andy Penn revealed the company's plan for the next four years, unveiling T25 - the next tranche of T22, which is part of an ongoing transformation of the telco. This is the company's strategic program aimed at leading the Australian telecommunications market by simplifying its operations and product set, improving customer experience and reducing its cost base.
Under T25, Telstra is set to deliver 5G services to around a 95% coverage of Australia by FY25, while 4G and 5G regional coverage will also expand a further 100,000 square kilometres.
Penn says that, over the next three to five years, the 5G rollout will see a doubling of metro cells to increase density for greater capacity and speed.
Telstra is banking on customers flocking to 5G, boosting the next-gen technology to 80% of all mobile traffic by FY25. But the transformation will come at the expense of a further $500 million in fixed costs.
Mr Penn said the new strategy is focused on four areas: customer experience; technology; value for shareholders; and creating a place where people want to work.
The new plan will begin from the end of T22, which he describes as moving from a "strategy of necessity" to a strategy of growth.
On the financial side, the company intends to lift underlying return on investment capital to 8% by the FY 2023 and deliver mid-single-digit earnings growth and per-share compound annual growth rate in high teens to the 2025 period. $500 million of costs will be stripped out of the business. This is on top of the expected $2.7 billion of cost savings under T22.
It expects that most of this growth will come from mobile services. The company plans to install an extra 250 new mobile towers across the country. As this infrastructure is now open for other providers, the company estimates it will also add 700 new tenancies to the network.
The company's separate infrastructure company (InfraCo) will add a range of new products to its portfolio including dark fibre and data centre services. Dark fibre has been a monopoly that Telstra always has fiercely protected, so it is no wonder that since opening this market some nine months ago, they have already sold 190 services to 22 customers.
Dark fibre is simply a length of fibre optic cable which has no equipment connected to it and is not transmitting any data. A business will lease or buy this fibre from Telstra and then fully manage the equipment, deployment, security, traffic and maintenance themselves
Now to the customer side of the plan. It will focus more on customers and turn its loyalty program Telstra Plus into a full-scale sales and marketing channel under T25. There will be a key focus on the use of technology to achieve this. The company aims to increase the number of customers on this program from the current 3.5 million to 6 million by 2025.
The reward service provides points on money spent with the company. Rewards include smartwatches and mobile phone accessories. Recently, Telstra also offered members who are fully vaccinated to receive 2,500 points and the chance to win 5 million points and credit on eligible Telstra services for a year (capped at $3,500).
The program is also available for small and medium-sized businesses (SMB), who do have their own set of rewards. Their aim is to have 50% of their SMB customers be totally digitally active by 2025.
The company is rapidly expanding in a multi-functional utility with services such as entertainment, smart energy, tech support and security. It is also committed to building digital literacy skills for an additional 50,000 customers.
Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.