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Telstra continues to record strong sales momentum and is on track to achieve its guidance of low single digit percentage growth in total revenue and EBITDA, CEO David Thodey said today.
Speaking at Telstra’s annual update for institutional investors, Mr Thodey said that over the September 2011 quarter the company continued to record strong growth in mobile customer numbers and had also added fixed broadband customers.
“Our focus on adding customers and improving satisfaction continues to bear fruit, with strong sales momentum in the opening months of fiscal 2012. Importantly, we are adding those new customers profitably and without sacrificing average revenues per customer (ARPU),” Mr Thodey said.
Mr Thodey told investors the company was making substantial progress implementing its strategy first unveiled more than a year ago: to add customers, improve customer satisfaction, simplify the company, and target growth opportunities in Asia, digital media and network-based applications and services.
“Our strategy is unchanged and our focus remains on execution. Already our customers are reporting higher satisfaction levels as we make the business less complex and easier to deal with,” Mr Thodey said.
Telstra’s strategy has seen the entire sales workforce brought together in a single team, the introduction of clearer bill formats and simpler pricing plans, and the publication of easy-to-understand one page summaries for key products and offers.
More than five million customers have called Telstra after business hours and more than 100,000 technician appointments have been scheduled for weekends, following the introduction of the services.
As a result of these and other customer service improvements, in the year to September 2011 Telstra recorded 28% fewer incoming calls to customer call centres, 51% fewer ordering errors requiring manual intervention, 34% fewer repeat visits to fix recurring problems at customers’ homes and businesses, and 70% more self-service transactions using the company’s upgraded online portal.
These and other similar initiatives generated $622 million in productivity benefits in fiscal 2011 and are expected to deliver an even greater benefit in fiscal 2012.
Digital media division established
Telstra also today announced it will consolidate its media businesses into a single division to increase focus, drive new opportunities and better utilise the company’s many media assets.
“Telstra is a leader in online digital media with multiple assets which, including FOXTEL, earn $4 billion in annual revenues and employ approximately 4,000 people. Telstra’s digital media division will bring these assets together for the first time and enable us to implement a co-ordinated media strategy that delivers long-term shareholder value,” Mr Thodey said.
The new division, to be known as Telstra Digital Media, will be responsible for managing Telstra’s end-to-end media capabilities including Sensis, BigPond, Trading Post, IPTV, FOXTEL and other content arrangements.
“As digital media and video content continues to grow it is important that we build network infrastructure to meet this demand. We will also continue to integrate this content, making it available to our customers across multiple channels including mobiles, tablets, home entertainment systems and the internet,” Mr Thodey said.
The new division will be headed by Rick Ellis, an experienced media executive who will join Telstra in early 2012 after completing his role as chief executive of the New Zealand broadcast television and digital media company, Television New Zealand.
“I am delighted that Rick Ellis, a media executive with vast experience and strong networks, will be leading our media strategy. Rick has led a complex media organisation, established digital businesses and cultivated strong relationships with content generators, integrators and distributors around the world,” Mr Thodey said.
Mr Ellis will commence in January 2012. He will report directly to David Thodey and join Telstra’s leadership team. Bruce Akhurst, the CEO of Sensis, and JB Rousselot, the head of Media, will report to Mr Ellis.
Mr Thodey also said that Telstra will invest $100 million over four years to upgrade its media infrastructure. The investment will help bring to life Telstra’s digital home, and enable Telstra’s enterprise and business customers to more efficiently deliver broadcast-quality video streaming services to end-users over any device connected to the internet.
Outlook
Whilst re-affirming guidance, Mr Thodey noted there had been a shift in the mix of growth expected in fiscal 2012.
Sensis has experienced satisfactory but lower than expected take-up of digital products by SME customers. Revenues are also lower than expectations because sales completions are taking longer than expected and sales to new customers have been limited as a result. Additionally, the rate of decline in Yellow print directories has also risen significantly as market dynamics change more rapidly than expected.
These trends will put pressure on Sensis, resulting in an expectation of revenue percentage declines in the high teens for the full year, driven mostly by Yellow print directory and EBITDA margin compression.
Mr Thodey noted the group was, however, recording better than expected results in growth businesses such as mobiles, fixed broadband and network-based applications and services.
“Our strong performance in core and growth businesses, coupled with strong mobile profitability and productivity improvements, means Telstra remains on track to meet guidance for fiscal 2012,” Mr Thodey concluded.
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