Telstra shifts to growth phase
TELSTRA will slash $500m worth of fixed costs and ramp up its investment in 5G as part of what chief executive Andy Penn describes as “a strategy for growth”, with the telco giant unveiling its plans for the next four years.
Its new strategy, dubbed T25, will see Telstra pursue “high-teens” underlying earnings per share compounding annual growth rates to financial year 2025, along with a pledge to extend 5G coverage to most of Australia’s population.
“This is a very exciting day for Telstra as we announce what comes after T22,” Mr Penn said at the telco’s investor day on Thursday.
If T22 was a strategy of necessity, T25 was a strategy for growth, Mr Penn said.
“And in its implementation, we will be using exactly the same disciplines and governance that we used for T22 – the metrics and the milestones, the road maps and the scorecard. And this is why I am confident it will be a success – why change a winning formula when you don’t need to?”
The four-year plan is underpinned by four pillars – customer experience, network and technology solutions, growth and value for shareholders, and “the place you want to work”.
Telstra said it would add 100,000 sq km of new 4G and 5G regional coverage.
It will also target a 50 per cent carbon emissions reduction rate by 2030.
But the focus on cost control is not abating, with Telstra pledging to remove a further $500m in fixed costs from the 2023 financial year to 2025 financial year.
Telstra customers will also receive more services, with telco, energy and tech products and services personalised and localised for individuals using predictive analysis.
“Telstra is a vastly different company to what it was four years ago. With T25 Telstra will be a vastly different company, again,” Mr Penn said.
Telstra’s group executive for consumer and small business Michael Ackland said that the telco was aiming to lift its average revenue per user (ARPU) and that some of its mobile plans would rise in price in exchange for superfast 5G coverage.
Amid a wave of new iphones and ipads announced on Wednesday, Telsyte principal analyst Foad Fadaghi said that Telstra would be banking on an influx of consumer demand for the new devices, but that they’re holding on to their older handsets for slightly longer than they are used to.
“While the iphone 13 only brings a series of incremental changes, its target market will be those on iphone 10s or earlier,” Mr Fadaghi said.
“A new iphone always brings a wave of new activations for carriers and it should not be any different this year.”
Telstra shares rose 2c to $3.95 on Thursday.