Telstra's Thodey targets online service growth

James Riley
Wednesday, 28 October 2009 06:14

IT Industry - Strategy

Telstra chief executive David Thodey has reaffirmed financial guidance for 2009-10 with low single digit growth and says the company is on target to achieve free cash flow of $6 billion for the year.

While margins were likely to remain flat for the year, Thodey said the company would take advantage of its huge network and IT investments of recent years to enter new markets.

Specifically, Thodey told an Investor Day meeting it would target profitable and fast-growing markets for online content and online applications, as well complementary markets like storage, security and web-hosting for the enterprise, government and small business markets.

The strategic redirection did not amount to a fundamental change of direction, he said. But the recent improvements to corporate IT systems should allow the company to both improve customer service as well as enable it to expand into adjacent business and to offer online applications.

The new businesses would improve the Telstra retail offerings regardless of progress of the National Broadband Network or the changes to market regulation.

"Telstra has invested $12 billion over four years in advanced technology, and now it’s time to take advantage of those investments to defend and grow the core business," Thodey said.

"At its simplest, the next stage in Telstra's long-term strategy is to focus on satisfying customers, invest in new capabilities, and drive growth in new businesses.

"This will further differentiate Telstra from the competition, improving our position in the retail market irrespective of regulatory settings and the National Broadband Network, and ultimately deliver shareholder value," he said.

Content will remain a core part of the Telstra business, Thodey told investors, saying its Sensis and Telstra Media units had performed well and that the company would seek to develop its new media businesses in China. It will also selectively invest around its Asian businesses.

The company confirmed that four-year network transformation was largely complete, with 10 million customers and 20 million services now transferred to the new platform.

He said the transformation project has been completed within two percent of budget for $12 billion.