Strong Telstra earnings reflect sound customer service, 4G strategies: Analysts

Telstra’s customer service and LTE strategies helped the top telco add 1.6 million mobile customers in fiscal-year 2012, analysts said after Telstra reported earnings results.

“This is all about execution” and Telstra CEO David Thodey “is executing fairly well,” Gartner analyst Geoff Johnson told Computerworld Australia. The new emphasis on customer service has made Telstra “less the ogre or monopolist that it used to be seen as some years ago,” Johnson said. Thodey has “done a good tidy-up job, too,” especially with the recent sale of TelstraClear to Vodafone New Zealand, he said.

Telsyte analyst Chris Couglan said he was not surprised to see Telstra’s “outstanding” results on mobile and fixed broadband. Moving early to LTE has paid off for Telstra with 375,000 4G devices added in the fiscal year, Coughlan said. Vodafone won’t have LTE until next year and Optus has just begun 4G deployment.

Vodafone Hutchison Australia’s continuing problems contributed to Telstra’s rosy results, said BuddeComm analyst Paul Budde. “Because of its aggressive marketing campaign with very comparative prices, Telstra has been the main beneficiary of Vodafone’s troubles,” Budde said.

Telstra is solidifying its dominance in Australia, said Ovum analyst David Kennedy. “With accelerated investment in the LTE network, we believe Telstra’s mobile rivals will find it difficult to challenge Telstra’s network superiority. They will need to pursue strategies as `alternative’ providers to Telstra.

“We do not see any challenge to Telstra's infrastructure leadership, particularly in mobile, in the foreseeable future,” Kennedy added.

Budde noted that the boost in Telstra customers came with a cost. The company spent $1 billion on its customer service campaign to win back customers and it’s making less money per customer than it had in the past, he said.

“The company has indicated that [customer service] campaign is over and that they are increasing mobile charges obviously with the aim to increase their profit margin,” Budde said. “It will be interesting to see how that will pan out.”

However, with Vodafone “turning around” and Optus a “very aggressive” competitor, “it is highly unlikely that you can increase profit margins in any significant way.”

Follow Adam Bender on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

• Bookmark this page
• Share this article
  •  
  • facebook
  • slashdot
  • digg
  • Reddit
  • stumbleupon
  • linkedin
  • twitter
• Got more on this story? Email CIO
• Follow CIO on twitter

• Share
  Share this article1

  •  google+
  • facebookfacebook
  • slashdotslashdot
  • diggdigg
  • RedditReddit
  • stumbleuponstumbleupon
  • linkedinlinkedin
  • twittertwitter
• print
• email
• Bookmark