Telstra embarks on A$1b revamp

Australia's Telstra is planning yet another transformation in an attempt to counteract falling revenue from traditional services.
At the company's annual investor day today, Telstra CEO David Thodey announced “Project New,” a multi-million dollar program to simplify the business and drive up customer satisfaction.
The project, for which A$40 million ($38.7m) has been allocated in FY11, will involve 500 employees implementing 27 different transformational programs.
Telstra expects the program to be self-funding in FY11, and “substantially reduce costs” in the following years.
The project aims to improve customer satisfaction by 6% and reduce complaints to the Telecommunications Industry Ombudsman by 30% in FY11.
A series of initiatives introduced this year - such as the introduction of weekend technician appointments and the abolition of charges for calls to technical support - has already improved satisfaction 4.6% and reduced complaints to the ombudsman by a third, Thodey said.
The A$40 million put aside for Project New is part of an A$1 billion allocation to opex, setting aside A$450 million to maintain Telstra's share of the fixed broadband market and grow its share in mobiles.
Another key goal of Project New is to increase the percentage of Telstra's revenue earned from media, international and network-based applications and services to 20% within two to three years.
An opex budget of A$230 million has accordingly been allocated to promote new products such as its T-Box IPTV service.
Thodey said Telstra hopes to have finalized a deal with the government regarding separation that it can take to shareholders in mid-2011.
The Australian government is pressuring Telstra to give up its copper network in favor of the upcoming NBN, effectively shuttering its wholesale fixed-line business, in exchange for A$11 billion in compensation. The company began testing services on the NBN earlier this month.
But Thodey acknowledged that the company “needs to undergo a major restructuring” regardless of the outcome of the NBN negotiations. “This company must change,” he said.
Telstra's profit fell 4.7% in FY10, as a result of slumping fixed-line revenue and bleeding fixed-line subscribers.
But Thodey said the first two months of FY11 had seen Telstra add 32,000 fixed broadband subscribers and lose its lowest number of fixed telephony customers in any two-month period since 2007.
He added that the company believed it could maintain its historically high rate of annual dividends. The company paid out a full-year dividend of A$0.28 per share in FY10.