ISPs feel the heat from Telstra's new-found aggression

Stuart Corner
Tuesday, 17 August 2010 12:11

IT Industry - Listed Tech

Telstra's resolve to reverse its market share decline is already having an impact on the fortunes of two of its largest ISP competitors, TPG and iiNet.

Telstra CEO, David Thodey, opened his annual results presentation by saying: "The greatest asset that Telstra has is our customer base, and we have been losing too many customers. We cannot allow it. In fact, I am not going to allow it to continue."

He went to say that Telstra's response would be to "take a longer term view by investing…in customer service, simplifying the business and competing aggressively to retain and acquire customers, and of course to prepare for future opportunities…We are going to announce some bold but necessary steps to drive profitable growth over the longer term."

Worst hit by Thodey's fighting talk was TPG, which saw a spike in share volumes and a share price slump on the day following Telstra's results announcement on 12 August.

The company issued a statement seeking to re-assure the market, and was forced to respond  to a 'please explain' from the ASX, checking to see if the unusual trading pattern meant some shareholders knew something the rest of the market didn't.

In a report on iiNet in the wake of release of its annual results on Monday 16 August, Southern Cross Equities Analyst, Daniel Blair, said: "Clearly the immediate focus for iiNet is what Telstra will do to improve its market share position…Whilst we await the exact nature of Telstra's response, our forecasts [for iiNet] already assume an increased competitive threat. We forecast DSL net adds [for iiNet] of 2.2k p/mth in FY11, which is a significant reduction from the FY10 average of 4.0k p/mth."

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