Thursday, September 26, 2013

Fixed line phone hangups tell story of Telstra's long term transition

Telstra says its decision to cut 1,100 jobs from its operations division will not get in the way of winning lucrative new business from the National Broadband Network.

The decision was the result of a major restructure as the decline of traditional fixed line telephone connections continues.

There have been some dramatic changes for Telstra since its privatisation began right back in 1997.

So is this latest round of cuts a sign that Telstra's strategy is part of a new approach?

Telstra is no longer a company just known just for its copper wire network and phone lines into homes.

The first big change came in 2005, when the then-chief executive Sol Trujillo revealed a big decline in traditional fixed-line phone connections.

AUDIO: Telstra to trim more as it eyes NBN deal (AM)

He said this was because more customers were relying on their mobile phones.

More recently, consumers have been using new services like Skype, and there is also the threat of free calls from Apple's new operating system.

Telecommunications analyst David Kennedy says the old lines of the business are fading, but even new technologies are being superseded.

"The reason they've been forced to accelerate this sort of process is that a lot of the traditional business lines, especially for residential homes, public switched data network is in decline, but mobile and fixed broadband have reached a kind of maturity," he said.

"The connection growth has really tailed off over the last three years. So to maintain profitability the whole industry is now looking to reduce the cost base at a faster rate than they have done in the past."

With the shift to the NBN, Telstra has needed to become more efficient to compete.

And, of course, there is the unrelenting pressure to keep shareholders happy.

Under Labor, Telstra negotiated an $11 billion deal to decommission its copper network and to move customers over to the NBN.

Under the Coalition plan, Telstra might get even more work to get the NBN from the street corner to households using its copper wire.

But Mr Kennedy says it is not a done deal, and Telstra might need to trim even more staff.

"Telstra need to proceed with the sorts of efficiencies which they're implementing, irrespective of whether the NBN goes ahead or not - or in what form," he said.

"We now have a new government and its likely that the old copper network will continue to operate in some shape or form. If Telstra's going to operate the underlying copper then it's going to need to do so on a more efficient basis."

No comments:

Post a Comment

What's your view on this?