Telstra has announced Telstra 2022 to lead the Australian market by simplifying its operations and product set, improving customer experience and reducing its cost base.
Speaking about the strategy, Telstra CEO Andrew Penn said, “We will take a bolder stance and use the disruption in the telecommunications industry to lead the market for the benefit of our customers, employees and shareholders.”
A consequence of the plan is an expected net reduction in employee and contractor numbers of 8,000, including removing one in four executive and middle management roles to flatten the structure.
“We are creating a new Telstra that is able to continue to lead the market. In future, our workforce will be a smaller, knowledge-based one with a structure and way of working that is agile enough to deal with rapid change. This means that some roles will no longer be required, some will change and there will also be new ones created,” added Penn.
“The network investments have been critical as Telstra builds capability in software defined networking (SDN) and prepares to lead the market and win in 5G. We will be network ready in the first half of FY19 with full rollout to capital cities, regional centres and other high demand areas by FY20,” said Penn.
Telstra has announced it will transform the experience of its consumer and small business customers. This will be different to anything currently in the market, addressing the need to increase the simplicity, transparency and satisfaction that customers experience with telco products today. Telstra will simplify its products by retiring all of its more than 1,800 consumer and small business plans and instead introducing 20 core plans backed up by an effortless digital service.
Effective from 1 July, Telstra will create a wholly owned standalone infrastructure business unit called Telstra InfraCo will comprise Telstra’s high quality fixed network infrastructure including data centres, non-mobiles related domestic fibre, copper, HFC, international subsea cables, exchanges, poles, ducts and pipes. Its services will be sold to Telstra, wholesale customers and nbn co.
It is expected this new Business Unit will control assets with a book value of about $11 billion and have annual revenues and EBITDA of about $5.5 billion and $3 billion respectively.
Telstra also intends to elevate its focus and capabilities in product development and management across the company increasing the leverage and sharing of technical efforts across all customer segments.
Telstra intends to monetise assets of up to $2 billion over the next two years to strengthen the balance sheet. It is also increasing its target for its productivity program by a further $1 billion to reduce underlying core fixed costs by $2.5 billion by FY22. We expect Telstra’s total costs will remain flat or reduce despite absorbing more than $1.5 billion of increased nbn AVC/CVC costs that will be incurred as we migrate to the nbn.
The Telstra2022 strategy will deliver benefits for all stakeholders – customers, shareholders and employees and will ensure that Telstra remains Australia’s premium and most trusted brand in telecommunications.