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Still a long way to go, to get back to $7.40 issue price.
Yeah, adding more fibre optic cable in the cities already well supplied with FOC.Telstra, will more cash burn equal more income? I'm still not convinced. DYOR
Telstra’s Penn says new $1.6b spend good for earnings
The telco says its plans to lay new fibre optic networks, and build and manage on-the-ground satellite support will deliver incremental earnings.www.afr.com
Not enough return out there Mick, that's why only Telstra are out there and the very reason it should never have been privatised in the first place.Yeah, adding more fibre optic cable in the cities already well supplied with FOC.
Pity he couldn't spend a little to relieve the poor services in areas outside the big cities.
Mick
Monday’s 10-year network sharing agreement between Australia’s No. 1 and No. 3 telcos is strange: strange because Telstra and TPG, traditionally fierce competitors, both feel they come out winners.
It turns out that when rivals co-operate they can both do well out of it. Sharing allows them to monetise their infrastructure. How refreshing compared to some other decisions taken by business leaders, notably the shameful overinvestment in LNG export plants.
The deal fits nicely into Telstra chief executive Andy Penn’s broader strategy of monetising the telco’s infrastructure investments. In this case, he brings in between $1.6bn and $1.8bn over a decade in a deal that also allows Telstra to access TPG’s valuable 4G and 5G spectrum as more Australians shift to regions.
“Getting access to the spectrum, that’s a massive part of this deal for us to provide that enhanced service for customers while maintaining our strategic differentiation,” says Penn.
Telstra will offer wholesale services to TPG as it does to other mobile virtual network operators in the area, boosting wholesale revenues.
TPG chief executive Inaki Berroeta first spoke to me about sharing networks back in 2014, shortly after he took on the role.
“It takes industry time to realise we need to look for better ways of getting returns for our investments,” he says, adding he is delighted at a deal that will deliver much more for Vodafone, iiNet and TPG customers.
The network sharing leapfrogs TPG to second on the ladder for coverage, ahead of Optus. Telstra will have 99.3 per cent coverage, TPG 98.8 and Optus 97.3 per cent.
“We go from having roughly 750 mobile tower sites in the region to now having 3700, five times our infrastructure size in regional Australia, an incredible advance for us.”
Interestingly, while Berroeta sees more competition in areas where there was not much before, Penn does not see TPG’s creeping coverage as a threat. He says the deal is not really creating more competition in the doughnut around cities. “There is a bit otherwise TPG wouldn’t be doing it, but we continue to maintain our start differentiation with that coverage.”
Telstra’s leading national coverage has been the big selling point for customers and Penn says that will continue because Telstra remains the only coverage provider for the bush.
The other differentiator for both telcos is that the core networks for each, where all the different products and services like 5G are developed, are not shared.
The deal improves the economics for both to invest more in their networks for the benefit of customers. Any wonder that (respectfully) neither Penn nor Berroeta sees the Australian Competition and Consumer Commission as an issue.
And Penn can talk about value creation for shareholders just as Telstra shifts from his strategy of necessity (T22) to a strategy for growth (T25): “You put this in with energy, Digicel, the infrastructure investments, the Quantium and Intellihub, and now this: it’s about having long-term value growth.”
TICKY FULLERTON EDITOR-AT-LARGE, THE AUSTRALIAN BUSINESS REVIEW
Telstra’s Acquisition Of Fetch TV Given Green Light
Telstra’s takeover bid of content aggregator Fetch TV has been approved by the ACCC.
Telstra will acquire 51.4 per cent of Media Innovations Holdings, the owner of Fetch TV.
The ACCC said its review focused on whether Telstra would have the ability and incentive to foreclose competing broadband retailer’s access to Fetch TV.
Telstra TV comes with its retail broadband services, while Fetch TV supplies set top-boxes to broadband retailers to supply as an add-on to broadband services.
“Our investigation found that entertainment offerings are one important way for broadband retailers to differentiate themselves from competitors,” ACCC Commissioner Liza Carver said.
“However, Fetch TV does not appear to be critical or a ‘must have’ aspect for Telstra’s retail broadband competitors to offer consumers a competitive retail broadband service.
“With this in mind, it is unlikely the proposed transaction would lead to Telstra foreclosing rival broadband providers.”
Carver points out that less than 10 per cent of retail broadband customers in Australia acquire Fetch TV services from their retailer, and pointed out the many ways to stream content ” without the use of a set-top-box.”
The ACCC also examined the overlap between Telstra TV, Fetch TV, and Foxtel, which is 35 per cent. owned by Telstra.
“While Telstra is the largest broadband retailer in Australia, we have carefully examined the facts and circumstances of this acquisition as well as changes in the way consumers access entertainment.
“We have concluded that this acquisition is unlikely to result in a substantial lessening of competition,” Carver concluded.
What is the underlying difference between Fetch and Foxtel? Aren't they both just streaming devices.Fetch is now part of Telstra.
I don't see a lot of growth for Foxtel.
Telstra completes multi-billion dollar Digicel deal, widely seen as a bid to counter China’s rising regional influence
Telstra has completed its acquisition of Digicel Pacific and has received all necessary government and regulatory approvals for the $US1.6bn ($2.4bn) deal, in what as been widely viewed as a political move to counter the rising regional influence of China.
The acquisition of Digicel Pacific was announced in October with Telstra contributing $US270m of equity and the Australian government, through Export Finance Australia, providing the remaining $US1.33bn through a combination of non-recourse debt facilities and equity-like securities.
Telstra chief executive Andrew Penn said Digicel Pacific will be operated by Telstra International, headed by Oliver Camplin-Warner, as a stand-alone business.
“We are very pleased the deal has completed and we welcome Digicel Pacific to the Telstra family,” Mr Penn said on Thursday.
“We have been working closely with Pacific governments on this acquisition and we’d like to thank them for their co-operation and support. We look forward to continuing to work with them as we operate Digicel Pacific and strengthen our relationships in the region.”
Digicel Pacific will be overseen by a Telstra-controlled board, chaired by Telstra Enterprise group executive David Burns.
The acquisition comes amid a period of intense political interest in the Pacific. The US this week announced more funding for fisheries, extra aid, and offers of new US embassies in the Pacific, as it jockeys for influence alongside China.
Digicel is the largest mobile phone carrier in the Pacific and operates 3G and 4G networks across PNG, Fiji, Samoa, Vanuatu and Tahiti with about 2.5 million subscribers.
The deal had been threatened by a new $US100m ($133m) super tax in Papua New Guinea. PNG’s parliament in April passed an amendment to the country’s tax act, creating new tax of for telcos that have a market share of more than 50.1 per cent – a tax that would only affect the Jamaica-headquartered Digicel.
A Telstra spokesman said the tax issue had been resolved but did not disclose whether the telco would be paying the tax.
“The vendor has made arrangements to resolve the matter with the PNG tax authorities. Telstra is not part of this process, and the outcomes of this process are a matter for the vendor.”
Foreign affairs minister Penny Wong said in a statement: “The Australian government’s support for this transaction reflects our commitment to help build a stronger Pacific family through investment in high-quality infrastructure.
“Telecommunications and digital access are critical to sustainable economic growth and development outcomes into the future.”
Don Farrell, minister for trade and tourism, said the acquisition’s closure “marks a significant milestone in Australia’s economic engagement with our Pacific family.
“This transaction sends a positive signal of business confidence in the Pacific region, and we hope it will encourage further investment in the region from top tier Australian companies.”
DAVID SWANTECHNOLOGY EDITOR
The message behind Penn’s parting Telstra profit
A small but highly symbolic gesture by Telstra’s board – hiking the second-half dividend by half a cent – sent a clear message that the telco has made it through to the other side of a painful but much-needed makeover.
Chief executive Andy Penn steps down at the end of the month after more than seven years and has largely delivered on his ambitious T22 program that slashed billions in costs, including pulling 8000 staff from the organisation, slicing management layers and selling off heavy assets such as towers.
It’s unusual for the dividend to be increased at a company where top-line growth numbers are still going backwards, particularly in an uncertain economic environment, but it is a vindication for Penn’s four-year restructure, which has now come to an end.
“There’s no doubt we are in a very different place today as a consequence of the changes that we made over the last four years,” Penn says.
Unusually, Telstra’s board is already banking the financial benefits of the extension to the T22 program and upgraded earnings guidance for next year, which are yet to come. It is also an expression of confidence about the delivery of further restructuring measures under new chief executive Vicky Brady.
The T22 program sought to rip out costs and dramatically simplify Telstra’s product offering, boiling down a sprawling 1800 business plans to just 20. The telco had become lazy on NBN payments and was trading on its incumbency. NBN payments – compensation for migrating Telstra copper wire customers to the high-speed network – are now drying up and profit margins remain under pressure, with data a commodity.
In delivering his own assessment, Penn says the T22 program has been a success, delivering a better outcome for customers and employees. And this means the financial benefits of a leaner, more efficient Telstra are set to come through for shareholders.
Telstra remains among the most widely held of Australia’s big companies, with retail shareholders making up more than 40 per cent of the registry. But it’s been a hungry time for much of Penn’s tenure. A painful call was made early: to reset the dividend from the David Thodey era, when Telstra’s rivers of cash were flowing fast and NBN compensation payments were ramping up. Those payments are coming to an end, with more than $8bn so far sent to Telstra since 2013.
Penn is a second-time CEO. His first tenure at wealth manager AXA Asia Pacific was cut short by the $13.1bn carve-up of the wealth manager between AMP and France’s AXA SA. Few second-time-round chief executives see the distance and Penn has survived in the role for more than seven years, to leave on his own terms. Come September 1 he plans to head to Europe with wife Kallie for a holiday and catch up with family. He expects to be active over time with board roles and focusing on the digital economy and the arts.
One of his last jobs as Telstra boss is to deliver a speech at the National Press Club later this month on the increasing economic threats around cyber attacks.
Seamless transition
As far as investors are concerned, the handover to Telstra’s new chief executive Vicki Brady on September 1 will be seamless.
Unusually for the telco, it is the second smooth CEO transition in a row, following the management trauma of the Sol Trujillo years, which shows that the settings in the John Mullen-led boardroom are right.
Brady, the current chief financial officer, has committed to the extension of outgoing chief Andy Penn’s cost-cutting program which internally is called T25. And despite the headwinds, she has guided the market to underlying earnings growth of between $500m and $700m next financial year.
That means while more costs are set to be taken out, Brady won’t be pushing through a hard restructure for a company that until recent years has had more strategy resets than iPhone releases.
Brady’s immediate challenge when she takes charge is to steer Telstra with its $14bn cost base through the inflation storm. The company has in-built buffers, including price rises in mobile, and customers are facing inflation-linked contracts which go live in September this year.
There is still another $1bn in recurring NBN payments that are indexed to inflation. On the costs side, Telstra has actually found it has locked in savings on energy. But one project to watch is the ambitious $1.6bn intercity fibre project. Already costs estimates are threatening to blow out from when the project was announced in February, with inflation particularly around construction and fibre supply. For now Telstra is committed to its capex budget.
Elsewhere Brady is working on the T25 program, which is already under way, and has the ambition of turning Telstra’s long stuck revenue line around to secure mid-single-digit annualised growth through to financial 2025. It is also targeting another $500m in annualised cost savings.
Brady believes the foundations for Telstra are in place, with momentum in the business even after Thursday’s 4.6 per cent drop in annual net profit to $1.8bn.
But this is Telstra – a company with an extensive history of negative surprises.
Brady, who grew up in the NSW Riverina town of Holbrook, will also steer through the network-sharing agreement with smaller rival TPG Telecom. This deal, which will essentially see TPG link to Telstra’s infrastructure in regional Australia, is facing intense opposition from rivals, including Optus. The competition regulator is set to make a ruling on the deal in October.
Brady is taking charge as Telstra is positioning itself to control all of the platforms that we use in the shift to digital. All telcos are facing another step-change demand for data as new tech such as AI, Edge Cloud and 6G is being refined.
Best of luck sunshine ? you're obviously not a long term holder.Telstra announcing a bright future and increases in profits for next few years. There will be investors that will disagree, but so far the facts are on the side of the TLS board. I’ve been lucky with TLS, luck only lasts for so long ?
Best of luck sunshine ? you're obviously not a long term holder.
Maybe I will get to see them back at the price of the sale of the third tranche.
Absolute ripper share.?
Way back when, the Govt had no trouble selling Telstra to the widowed mother in law, I couldn't convince her to buy CBA at $10, just shows how much mums and dads listen to politicians and the media.
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Yes if you want to trawl back through this thread, I kept saying they are a good buy at $2.80, I just couldn't bring myself to get back in.In 2020 I decided to own TLS again and purchased at $2.80.
Yes, luck and sunshine for me and TLS. Will it last, I don't know but I will monitor it like I do all my investments.
I've been patiently winning back some sizeable losses on TLS over a fair few years, so no news with a rising price is good for me Mick.For such a large company that plays a significant part in many lives, I am a little surprised there has been little recent verbiage on TLS.
Has anyone gone into TLS after the fiasco that was the Optus data Breach?
It seems that more than a ew corporate customers of Optus have terminated contracts and gone over to the Devil.
Probably a few private customers as well.
All those new cars that now demand OTA updates will all have to have sim cards, but seeing as most of them are from China , the data is going two ways.
Telstra profit jumped 26% with income up by 6.4% for the past six months.
Sounds like a solid result.
Mick
$7.40 is still a long way off and the ACCC is still sitting waiting to pounce, if Telstra start getting a major market share, or start making too much money. LolI've been patiently winning back some sizeable losses on TLS over a fair few years, so no news with a rising price is good for me Mick.
gg
Well, that's the point. NBN on one side, ACCC on the other, competition snapping at yr heels (until Optus self imploded); so, become an annuity biz.For such a large company that plays a significant part in many lives, I am a little surprised there has been little recent on TLS.
Ah, yes, but slowly rebuilding .... $4.29 and hasn't been to such a point since 2017Still a long way to go, to get back to $7.40 issue price.
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