TLS - Telstra Corporation

TheAbyss said:

. They are mums and dads, they are gen y. People expect quality and that is what they are getting.

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I nearly choked on my sandwich when I read this line. Quality? As recently as 6 years ago their copper lines they put to the new unit I was living in at the time in Sydney were so pathetic that I couldn't even get ADSL on it. They were (and probably still are) unable to combine their billing for broadband internet and mobile/phone bill. Just trying to get a Customer Service rep on the line is like undergoing Chinese water torture and it turns into something even worse once you finally manage to get one on the line. They can't provide itemised data charges for mobile phones. And the list goes on.
They probably have qualities that are appreciated by some, but quality?

Worth bearing in mind that the NZ govt forced Telecom to split into three standalone businesses, without any compensation to shareholders.
Not saying that it will necessarily happen to TLS but the precedent is there, not only in NZ but elsewhere.

rub92me said:

I nearly choked on my sandwich when I read this line. Quality? As recently as 6 years ago their copper lines they put to the new unit I was living in at the time in Sydney were so pathetic that I couldn't even get ADSL on it. They were (and probably still are) unable to combine their billing for broadband internet and mobile/phone bill. Just trying to get a Customer Service rep on the line is like undergoing Chinese water torture and it turns into something even worse once you finally manage to get one on the line. They can't provide itemised data charges for mobile phones. And the list goes on.
They probably have qualities that are appreciated by some, but quality?

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This is not the complaints department it is an investment forum. No company is perfect and the more customers you have the higher number of bad news stories will abound. My question to you is are you still using any Telstra services? Lot of people complain but still acknowledge there is no real alternative sometimes.

Their Next G services are 2nd to none and they are quality. Watch them ramp up the speed over the next few years on mobile data. The MPLS network is the acknowledged world leader so yes it is quality. MPLS is the patform the data network is based on and delivers speeds required for future uses such as video etc. One day you will be able to ring Telstra and ask for internet and they wont ask how much you will just get it and it will be sufficient for everything you could possibly want. Does your electricity or water provider ask you how much? No they just connect you. Different for business of course as usage varies dramatically. Telstra are the only ones capable of doing this and this is the sore point for a lot of people so change is inevitable imo.

Off topic somewhat though sorry. TLS will be around long after we are all gone and to not have some in any balanced portfolio is unwise imo. The sell off was over done is my point and i bought some and more than happy with my investment for now.

Watch them announce a major customer signing shortly perhaps a large bank or similar just to shift the focus somewhat

ROE said:

TLS is nothing without their copper lines...FTN will make copper infrastructure obsolete... TLS manage to get customers by holding on to copper line and make it difficult for people to move around

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And yet they've been running down the copper network for years through lack of maintenance, outsourcing and a general "patch up" mentality.

A classic case of what's wrong with how Telstra works:

At work we needed 3 copper lines installed. A simple job since the cable is already there - they just have to connect it, supply a phone number etc.

So what does Telstra do? Send a technician half way across the state (and we're in the city) to connect one of the lines. The technician informed us that someone will be back later to connect the other two - possibly one visit for each line.

Now, for those not aware, it takes only a few minutes work to do the connection. One 30 minute visit would have done the lot easily. But no, they want to travel ridiculous distances and spend a fortune instead.

The average 5 year old could work out that this isn't a particularly productive or economical way of getting the work done.

From an investors point of view there are a number of problems with Telstra.

1) The confrontational style of the hard men at the top. One must query whether their approach is the best path to shareholder's wealth. By getting the govt. offside they are finding out that if the govt. can close a door in their face, they will. By getting so many end users off side, there is political support at grass roots level for the govt. attitude.
2) By holding an effective monopoly they will be fighting the regulator on a continuing basis. This is a distraction from managing the company better.
3) With the steady increase in wireless's ability to replace copper in that last mile connection, Telstra's monopoly of that connectivity is on the wane.

I think there is a good business case for Telstra to split itself. "Old Telstra", call it Last Mile Limited, sells local bandwidth to all comers without any bias. A good steady business, like a toll road, to suit conservative investors.
"New Telstra" then becomes a high tech. company selling phones, internet connectivity, television, - whatever promises to turn a fast buck. The mindsets and management styles of the two companies would be quite different. Hence
4) Telstra is a conglomerate. Conglomerates are way out of fashion as specialists do better. Until Telstra sells off its low profitability divisions it will be a second-rate dinosaur. Regrettably current management thinks the current mish-mash is an asset.

Not many TLS fans here.........thought I would play a little devils advocate.

1. I think TLS 'independent management' is a massive plus for the company as opposed to the former TLS managers who gave away shareholder funds to do what the gov wanted..........for those who actually know about TLS long term transformation, it's actually about enhancing the business and shareholder returns, not pleasing the gov.........good luck to the builder of Fibre to Node....it's great that it won't be TLS putting up the cash........fact is that they need TLS customers to make it work and the gov. will literally have to force them through structural separation.......that should be interesting

2. Someone can again explain the concept of monopoly to me.....yes, they own copper wire that came with an access regime in place.....not sure if anyone's notice but since 2005, TLS has only been putting money into 'non-regulated', 'non-monopoly' endeavours.....nextG, nextIP, ADSL2+......I think you get confused with the old TLS management who milked the monopoly, made wasteful acquistions and lifted the dividends ratio on falling earnings....for anyone who actually knows the business, TLS has done quite remarkably in slowing the migration away from the fixed lines...

3. Someone can explain to me how consumer's moving to wireless is a threat to TLS 'monopoly' after TLS created it's own 'monopoly' with its NextG, NextIP networks that no other firm in this country will ever invest the cash to match

4. While a spit in the company may interest those short term arbitrages after a quick buck........the current TLS model is quite a beautiful thing for shareholders and consumers alike............my understanding of a conglomerate is a firm with various businesses with only tenuous relationship................that's certainly not the beautiful, vertically integrated TLS model

The great thing about current management was an early determination to grow and make all these assets leverage off each other......I would not know what divisions TLS would want to sell off....under the current business model, all divisions are so vital.....you got infrastructure, customers and content

5. Bottom line: there is no way fibre will be profitable especially if TLS upgrades its cable network.........that means the government literally has to pass a law forcing TLS own customers from the copper and onto the fibre.........I can't wait to see the regulatory solution..........no matter, cause TLS is not wasting shareholders funds on this debacle, they shall ensure funds are invested where they will get a return....

too much debt, one main asset that will one day be worthless, if you ask me telstra is a risky investment, technology will phase out landline phone completely and everything will be satellite, thats talking very long term... the only thing theyve got going on is the mobile phone side of things.. over priced risky long term company IMO.

I agree with rain maker- also having worked in telco for 15 yr+- I am confident that the management do not care about being excluded - Infact it was probably planned- They know they cant lose - if they build it they will make money- If they dont build it they will make money- They are not going to give something away for nothing- they want to make $$$ full stop. The sell off was really just scared investors who fell for the media hype IMO. I will hold my parcel for now.

Kirtdog, in principal I agree with you. One minor point, it is unlikely to be satellite technology as the quarter second up/down time kills voice conversations. However, my son has no land line. He uses mobile phone (Vodaphone) and public wireless for his internet connection. And he is not alone. Nomads like him are already land-line free and better cheaper wireless is imminent. Very soon land-lines will go the way of film cameras.
Ta-Ta Telstra

LCL

You don't think the boffins at Telstra are aware of this and are working on a solution. I.E. Not satellite, but rather Next G, Wireless, Cable or whatever they perceive to be the next "big thing"?

This is probably a silly question, but with all these natural disasters, is Telstra's network insured? They have come out today and said that it is going to cost hundreds of millions to repair and replace damaged infrastructure. Are they insured for this?

So Sol is gone. He needed to leave to have his earnings remain tax free. Telstra needed him to leave to find a way back into the new government project.

What do people think the best play for tls is now?

What Telecom NZ did to get themselves back in favour with the NZ government was to appoint an external CEO...someone with no baggage re: separation of their business. And from all reports things there are looking rosy again.

They got someone from BT. Telstra's consultant has also spoken to someone within BT. Sticky point is investors might get a little peeved having to pay for an expensive import again especially with the the value of the AUD.

Personally I was happy with Sol's performance overall (Ziggy was a flop). The talk is Sol was quite surprised how much media speculation came with the job. And compared to that disaster in HK, it appears the partnership venture into China could be a good revenue raiser.

I find it funny that our own government would bend over so far for foreigners in the name of free trade that they wouldn't hesitate to ban Telstra from the NBN. You don't see the Singapore government ask Singtel to structurally separate if they wanted to tender and then win (in parternship with that Cannuck mob whose name escapes me) the Broadband rollout there....yet the cheek of it's puppet Optus to demand that of Telstra.

Our PM was asked yesterday his thoughts on the departure of the TLS CEO...
Journo: Any reaction to Sol's departure?
Rudd: Um, adios
Journo: Will ppl be entitled to be angry if he walks away with a multigazillion-dollar payout?
Rudd: That will be a matter for the many, many hard-working Australians who are currently TLS shareholders.

Pffffff!!!! what about the many, many hard-working Australians who have seen the share price dip not because of the economic crisis but because of the decision to ban TLS from participating in the NBN by your party?!?!?!?!

trading_rookie said:

Pffffff!!!! what about the many, many hard-working Australians who have seen the share price dip not because of the economic crisis but because of the decision to ban TLS from participating in the NBN by your party?!?!?!?!

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Telstra was arrogant to think it could make a bid for the NBN which didn't even meet all the pre-requisites. (It was written on 11 pages, or thereabouts)

The Govt had to make a decision, allow Telstra and receive complaints from the other bidders and the press, or ban Telstra which could increase costs. If you try to bully the Govt, eventually you will lose.

And let's face it, TLS has never been a great performer on the ASX even before the NBN. Mum's and Dad's have been losing lots of money from this company for a while. In my view its only a yield play, nothing more.

TLS's arrogance is due to wanting to be sure before they submitted a bid that they would't be forced into structurally separate their business.
The argument is look what happened at BT Group and Telecom NZ when they were forced to. It would be interesting how Singtel would have reacted if the Singapore government had asked them to separate their businesses before successfully winning the bid to build the NBN there in partnership with a Canadian mob...Axia I recall??

On two occasions the chariman, McGauchie has requested a meeting with Conroy (Senator for TeleComms) and twice rejected, incl. two letters they wrote to his office clarifying if they put in a bid will they be forced to separate their wholesale and retail business, which too were ignored. It appears the government is as arrogant as our biggest telco ;-)

Since they received no clarification they submitted what they discussed with their lawyers was sufficient then and a few days later some more info re: the governments request for impact to sme's.

This is the sticky point, and why the bid was rejected, not due to the amount of pages submitted. The government argues they wanted all documentation submitted that day - TLS are arguing show me where in the bid it stipulated this? TLS are also stating it was a 'bid' not a 'tender' ;-)

In hindsight, instead of playing hardball and being arrogant they should have submitted it all. We can call it a 'Mexican' standoff ;-)

If TLS were successful and then pulled out, because they'd be required to separate the wholesale and retail businesses, the government would have the right to sue them for not going ahead. And they'd have more of a leg to stand on, then when TLS unsuccessfully sued former telco senator Coonan and the ACCC.

And let's face it, TLS has never been a great performer on the ASX even before the NBN. Mum's and Dad's have been losing lots of money from this company for a while. In my view its only a yield play, nothing more.

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Excluding the dotcomm bubble where it hit $10 for a day, mum and dad investors in T1 and T3 have done okay with the share price...but then again, they're long term investors so the dividend payouts they've received since T1 have yielded quite nicely. Godd to see TLS will not cut it's interim dividend despite the price heading south after being excluded from the NBN.

I like TLS at this price but I know more about the people who build their transformation IT system and I tell you this mob going to bleed TLS dry, leave a half ass system ..
nothing will works ..Billing Chaos will be upon TLS in the next few years with them wasting more time disputing bill with customers than collecting it.

American Amigo will be gone along with half of the yanks that responsible for this transformation projects ..no one left to kick and TLS will be picking up the pieces... arm with that knowledge I stay away.

we call them the viking of IT world, they come they pillage and they go

Bit of press coverage in the last day or so regarding the NBN process.

We have had Maha "why use a sentence when i can use 20" Krishnapillai telling us why Telstra should not be allowed back into the bidding process

Media speculation that the Govt will be up for billions in compensation if Telstra are excluded and other reports that the whole process is flawed without a telstra bid.

I suspect things are warming up for a government rethink on the NBN bidding and Sol may well become the scapegoat that the government can point at and say ok now we will let you have another crack.

Personally i believe that Telstra will win no matter what happens as they have all the cards to play and any competitor will surely die a slow death no matter how much the ACCC prop up the competition. Singtel are losing market share each quarter and haven't found a solution to halt the bleeding as yet which is why they are desperate to lobby Telstra out of the NBN process. Pity of it is if the Singtel consortium win they will lose as the rural data side of things will cost a fortune to deliver and australians just dont want to pay a high fee for internet.

The existing infrastructure is key for any NBN delivery so in the end there can be only one solution whether the govt or anyone else likes it or not from an infrastructure investment perspective.

Lot of nervous investors out there. Div day and TLS down 6%. Wonder what their share price will be come Monday?

Fairly new at this, looking at charts Telstra's had a fairly slow or minimal recovery from ex div, but those were quite a while ago

I wonder how people will/are reacting to these though

Call for urgent ACCC intervention to ‘stop Telstra stealing customers’ say competitors

Canberra carriers being cut by Telstra: CCC