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Telstra 

“Market Cap $58.1 B As of May 2014

At a Glance
  • Industry: Telecommunications services
  • Founded: 1901
  • Country: Australia
  • CEO: David Thodey
  • Website: www.telstra.com
  • Employees: 37,721
  • Sales: $24.68 B
  • Headquarters: Melbourne
Forbes Lists

#225 Global 2000

  • #375 in Sales
  • #168 in Profit
  • #665 in Assets
  • #163 in Market value
Profile

Telstra Corp. Ltd. provides telecommunications and information services in Australia and internationally. The company provides fixed and mobile network infrastructure, broadband access and Internet services, wholesale services and cable distribution services. It offers basic access services, local and long distance telephone calls, broadband access and content services, data and Internet services, and cable distribution services, as well as advertising, search, and information services, pay television, international connectivity, roaming, and 3G network services, as well as management services. The company operates through nine business segments: Telstra Consumer and Country Wide, Telstra Business, Telstra Enterprise and Government, Telstra Wholesale, Telstra Operations, Telstra International, Telstra Media Group, TelstraClear, and Telstra Innovation, Products and Marketing. The Telstra Consumer and Country Wide segment offers telecommunication products, services and solutions such as mobiles, fixed and wireless broadband, telephony and pay TV to consumer customers in metropolitan, regional, rural and remote areas of Australia. The Telstra Business segment offers telecommunication products and services, communication solutions, and information and communication technology services to small to medium enterprises. The Telstra Enterprise and Government segment provides network services and applications and integrated voice, data and mobile solutions via Telstra Next Generation Services to enterprise and government customers. The Telstra Wholesale segment provides telecommunication products and services delivered over Telstra networks and associated support systems to non-Telstra branded carriers, carriage service providers and internet service providers. The Telstra Operations segment comprises overall planning, design, engineering and architecture of Telstra networks, technology and information technology and supply and delivery of information technology solutions to support its products, services, customer support functions. Telstra Media Group segment comprises management and growth of the domestic directories and advertising business, including print, voice and digital directories, digital mapping and satellite navigation, digital display advertising and business information services. Telstra International Group segment is responsible for managing Telstra’s assets outside Australia and New Zealand. The TelstraClear business segment provides telecommunications services to the New Zealand market. Telstra Innovation, Products and Marketing segment responsible for innovation, product, promotion and pricing across Telstra. This segment is also responsible for the overall brand, sponsorship, promotion and advertising direction of company. Telstra was founded in 1901 and is headquartered in Melbourne, Australia.

“Telstra History

Australian telecommunications services were originally controlled by the Postmaster-General’s Department (PMG), formed in 1901 as a result of Australian Federation. Prior to 1901, telecommunications were administered by each colony. On 1 July 1975, separate commissions were established by statute to replace the PMG. Responsibility for postal services was transferred to the Australian Postal Commission (Australia Post). The Australian Telecommunications Commission (ATC), trading as Telecom Australia, ran domestic telecommunication services.

In 1989, the ATC was reconstituted as the Australian Telecommunications Corporation.

In 1992, the Overseas Telecommunications Commission, a separate government body established in 1946, was merged with the Australian Telecommunications Corporation into the short-lived Australian and Overseas Telecommunications Corporation (AOTC) which continued trading under the established identities of Telecom and OTC. The AOTC was renamed to Telstra Corporation Limited in 1993. The name “Telstra” is derived from the word Telecommunication Australia (TEL from Telecommunication and STRA from Australia). The corporation then traded under the “Telstra” brand internationally and “Telecom Australia” domestically until uniform branding of “Telstra” was introduced throughout the entire organisation in 1995.

Telstra has faced competition since the early 1990s from Optus (Australia’s second largest communication company) and a number of smaller providers. It retains ownership of the fixed-line telephone network, as well as pay TV and data cable network Foxtel. Other companies offering fixed-line services must therefore deal with Telstra, except Optus, Transact and a few others who have installed their own infrastructure.

Overseas Telecommunications Commission

The Overseas Telecommunications Commission (OTC) was established by an Act of Parliament in August 1946. It inherited facilities and resources from Amalgamated Wireless Australasia Limited (AWA) and Cable & Wireless, and was charged with responsibility for all international telecommunications services into, through and out of Australia.

On 1 February 1992, it was merged with Australia’s domestic telecommunications carrier, the Australian Telecommunications Corporation Limited (“Telecom”), to create the Australian and Overseas Telecommunications Corporation Limited (AOTC). The new organisation underwent a corporate identity review and was subsequently renamed Telstra Corporation Limited (“Telstra”) for international business in 1993 and domestic business in 1995.

When it was established in 1946, the OTC inherited facilities that had been depleted during World War II and faced rising costs and falling profits.

Throughout rapid developments in undersea cable networks, global satellite systems, and burgeoning digital technologies, the OTC maintained a keen watch over its services to ensure continued quality. It also maintained and developed its links with maritime services, one of the initial arms of Australia’s international telecommunications network.

Privatisation

Telstra was privatised in three different stages, informally known as “T1” ($3.30), “T2” ($7.40) and “T3” ($3.60) in 1997, 1999 and 2006 respectively.In T1, the government sold one third of its shares in Telstra for A$14 billion and publicly listed the company on the Australian Stock Exchange. In 1999, a further 16% of Telstra shares were sold to the public, leaving the Australian government with 51% ownership. In 2006, T3 was announced by the government and was the largest of the three public releases, reducing the government’s ownership of Telstra to 17%. The 17% remainder of Telstra was placed in Australia’s Future Fund, which will provide superannuation and pensions for Australia’s public servants. In 2009, the Future Fund sold off another $2.4 billion worth of shares reducing the government’s stake in Telstra to 10.9%. In August 2011, the Future Fund sold its remaining “above market weight” Telstra shares, effectively completing Telstra’s privatisation.

National Broadband Network

On 26 November 2008, Telstra submitted a non-complying tender issued by the federal government to build a National Broadband Network, a 12-page letter proposing a $5 billion broadband network covering between 80 and 90 percent of the Australian population in major cities, despite the tender requiring 98 percent coverage.

As a result, Telstra was removed from the National Broadband Network RFP process on 15 December 2008. In response, Telstra has announced that it will raise speeds on its existing Next G network and HFC “cable” network so that they both offer higher speeds than the RFP for the NBN requires. Following Telstra’s exclusion from the National Broadband Network bidding process Telstra’s share price suffered the biggest one day percentage fall in its history.

NBN Co signed a definitive agreement with Telstra on 23 June 2011, estimated to be worth A$9 billion post-tax net present value, building upon the signing of a financial heads of agreement a year beforehand. Telstra agreed to “disconnect” its Internet customers from the copper and hybrid fibre-coaxial networks in areas where FTTP has been installed, and agreed to lease dark fibre, exchange space and ducts to NBN Co. As part of the agreement, Telstra would not be able to market their mobile network as an alternative to the NBN for a number of years. Telstra remains the owner of its networks. On 18 October 2011, Telstra shareholders overwhelmingly approved the deal.

Strategy and execution 2010 onwards

Under the leadership of David Thodey, Telstra embarked upon a transformation agenda to become more sales and service focused. As part of that, an ambitious customer service agenda was defined.

Market share recovery

Early in 2010, Telstra announced the creation of a $1 billion “fighting fund” to be used in a concerted effort to win back market share in key product categories. This effort seems to have paid off with strong sales momentum announced in February 2011.

Customer service recovery

As part of its new strategy, Telstra announced that its “goal is for customer service to be fundamental to everything we do”.

For the financial year ending June 2011, Telstra saw Telecommunications Industry Ombudsman (TIO) complaints drop by 3% to 78,949.

The following table shows total complaints handled by the TIO, and of those, the ones made against Telstra.

Telstra Digital

In February 2011, Telstra announced the formation of Telstra Digital under the leadership of Gerd Schenkel who was hired from National Australia Bank/UBank. Telstra Digital’s initial purpose is to improve the use of digital channels for customer service. In March 2011, Telstra Digital launched new mobile phone plans that include electronic bills and payments and levy a $2 charge for paper bills. In April 2011, Telstra Digital relaunched its web homepage design. In July 2011, Telstra Digital launched “CrowdSupport”, an online forum to crowd source customer service. This was later copied by rival Optus. As of July 2013, Telstra’s “CrowdSupport” had 65,000 members and 77,000 posts. It was also cited as an example of “scaling at the edge” by Deloitte’s Centre for the Edge.Telstra Digital

In August 2011, Telstra Digital announced expansion of customer service into social media with 24/7 coverage. In June 2013, Telstra was ranked ninth in large Australian companies in establishing a presence on Facebook, and in May 2013 Telstra was ranked fifth globally in the quality of its customer service on Facebook. As of August 2013 Telstra 24/7 now ranks #1 in the quality of its customer service within Australia, ousting Vodafone and Optus, which trail at third and fourth place, respectively.

By November 2012, Telstra claimed 140,000 live chats for the month and a growth rate of this service of 600% p.a.

In October 2013, Telstra announced that it had grown its Live Chat workforce to 600 and its social media workforce to 30.

In September 2011, Telstra Digital launched a new account services portal to help achieve its goal of managing 35% of Telstra’s transactions In February 2012, Telstra Digital announced it had achieved 28% of Telstra’s transactions online. In November 2012, Telstra announced it had achieved 35% of its service transactions through digital channels “about 9 months ahead of target”. In September 2013, Telstra disclosed that 40% of transactions were “now completed online”.

In October 2011, Telstra Digital announced a new mobile smartphone optimised version of its website.

In November 2011, Telstra Digital launched an iPhone app on a trial basis as well as a new online mobile phone shop. In July 2012, Telstra Digital launched smartphone and Facebook apps for customers to manage their Telstra accounts and in November 2012, Telstra claimed that over 700,000 customers had downloaded those apps. In August 2013, Telstra revealed that the apps reached 2.5 million downloads.

At a results announcement, CEO David Thodey remarked that “the group’s new online strategy was delivering” in the context of a 28% reduction of inbound service calls.Telstra estimated that its digital program will provide productivity benefits of $100 million in the 2013 financial year from lower printing costs, decreasing commissions to third parties, and reduced dependence on call centre staff.

In October 2012, Telstra’s CEO David Thodey stated, “The rise of online and social media had ‘fundamentally changed the way’ which the company communicated with its customers”.

In December 2012, Telstra published a white paper describing the broad impact of the digital economy and what firms in traditional sectors can do to deal with its impact.

In February 2013, Telstra introduced the ability to pay its bills via PayPal. And in June 2013, Telstra launched a new website, including the ability for customers to link their online accounts to their Facebook identity.

In December 2013, Telstra announced, as part of its Disability Action Plan, its intentions to remove all “captchas” from its websites.

In 2013, Telstra launched a new loyalty scheme called “TELSTRA THANKS” which allows customers to buy discounted movie tickets, music and sports tickets on its website.As part of this program, Telstra streamed live the Bon Jovi concert in December 2013 on its website.

In October 2013, Telstra launched a new “budget” broadband brand called “Belong”.

In June 2014, Telstra disclosed that it had 3 Million customers on “electronic billing” saving it $3 Million per month in cost. Telstra also claimed “over 40% of transactions being digital and 250 Million digital customer interactions per annum.

Also in June 2014, Telstra claimed 2.5 Million downloads and 1.5 Million regular users for its “Telstra 24/7” smartphone app. Telstra also mentioned that live chat accounted for 10% of total contact centre activity.

In June 2014, Telstra released a local marketing app called “Telstra Treats” on iPhone and Android.

Digital First

In March 2014, Telstra announced a new digital development program called “Digital First” as part of the corporation’s aim to generate A$1 billion worth of cost cuts by 30 June 2014. The implementation of Digital First will mean that Telstra will learn from the practices of online corporations such as Google and eBay so that it eventually conducts 65 to 70 percent of its transactions online, which meets the national Australian average. Schenkel stated that Telstra seeks to grow online sales by an annual rate of 20 percent, leading to a corresponding decline in telephone and retail patronage.

Telstra also published a white paper sharing some key metrics of their digital program:

Expansion of retail network

Expansion of retail networkIn June 2014, Telstra announced it was working on a new system to book and track call outs from its technicians.

In February 2011, Telstra announced the creation of an additional 100 retail stores within three years.

Telstra owns and operates a series of retail stores known as Telstra Stores. Some are directly owned and operated by the Telstra Corporation and some are operated by licensees.

The carrier opened the world’s first Android store, called “Androidland”, on Bourke Street, Melbourne, Australia, in December 2011.

These developments built on Telstra’s T[life] concept stores it had launched in the early 2000s.

New brand

In October 2011, Telstra launched a new brand identity and colour scheme. The new identity launched with the slogan “It’s how we connect”, and features the “T” from the previous logo in a variety of colours. This was followed by a “brand refresh” in February 2014.In 2013, Telstra was assessed as Australia’s third most valuable brand.

Sponsorships and awards

Telstra and Nintendo Australia made a joint venture to establish Wireless Wi-Fi Hotspots in restaurants around Australia so Nintendo DS users could connect to the internet to view HTTP/HTTPS pages on Nintendo’s Nintendo DS Browser and Nintendo DS games that were Nintendo WFC enabled.

Telstra is a major sponsor of the V8 Supercars car racing championship through its BigPond brand and directly sponsors the Sydney Telstra 500 event, the final round of the series held at Sydney Olympic Park.

In the past, Telstra had naming rights to the Telstra Dome in Melbourne, but lost these rights to Etihad Airways, the national airline of the United Arab Emirates, on 1 March 2009. Telstra is also the naming rights sponsor of the National Rugby League Premiership. Telstra is also the principal sponsor of Swimming Australia. They also sponsored the Minardi team for the 2002 F1 season, and the Rally Australia 2006 Championships.

In addition to its professional sponsorship Telstra supports community and sporting groups through its Telstra Foundation.

Telstra also has the naming rights (under TelstraClear) for the TelstraClear Pacific events centre in Manukau City, New Zealand.

Telstra sponsors numerous awards around Australia, including the Australian Business of the Year award, the MYOB Small Business Award, and the National Aboriginal & Torres Strait Islander Art Award (NATSIAA) which has become known as the Telstra Award. Notable past winners include Vaxine, APS Plastics, and eWAY.

Share price development

In November 1997, the Australian government sold the first tranche of its Telstra shares, 4.29 Billion shares, publicly at a price of $3.40 per share to institutional investors and $3.30 to retail investors. This sale is commonly referred to as “T1”.In October 1999, the Australian government sold the second tranche of its Telstra shares under the “T2” program for $7.80 per share to institutional investors and $7.40 to retail investors. In November 2006, the government sold a third tranche of its shares, “T3”, at $3.60 per share.

Since its privatisation, Telstra shares have hit a low of just over $2.50 per share in late 2010. Since then, Telstra shares have risen to $5 per share in December 2013.

In February, Telstra raised its dividend from 14c to 14.5c per share.

Sale of Sensis

In January 2014, Telstra announced its intention to sell 70% of Sensis to Platinum Equity for $454 million. Sensis was said to have once been “one of Telstra’s most lucrative businesses” and reportedly “has been under pressure in recent years amid competition from more agile digital alternatives such as Google”.

In February 2014, Telstra was reportedly seeking to reduce Sensis employment by 400 to 1,000 positions.”

*Information from Forbes.com and Wikipedia.org

**Video published on YouTube by “Telstra