2007: a high stakes year for Telstra

Stuart Corner
Wednesday, 03 January 2007 09:12

Opinion and Analysis

And some of the risks in such a project are largely outside Telstra's ability to anticipate, and to mitigate. Telstra says: "We are dependent on key vendors for the implementation of our transformation strategy, such as Accenture, Alcatel, Cisco, Ericsson, Siebel, Kenan Systems and IBM. Our dependence on key vendors for the implementation of our next-generation technologies creates a number of risks, including risks that key vendors may not deliver or perform as promised or may fail, and the products we have chosen may be discontinued or become unsupported. Also, our ability to use other vendors, obtain contractual recourse or secure intellectual property rights should one of our chosen vendors fail to deliver or perform as promised may be limited."

Even if all goes to plan on schedule and on budget there are still many more hurdles to cross. "The success of our transformation strategy depends upon the large scale customer take-up of newly-created products and services enabled by our next-generation networks, including our NEXT G wireless network. No other major international telecommunications company has proven the commercial viability of creating and marketing the next-generation products and services we are planning to roll out.

"There is a substantial risk that we will not be able to create and develop appropriate or commercially attractive products and services that take advantage of these new network capabilities and meet market demand or that we will not develop appropriately tailored bundles of products and services compared to our competitors. Even if we do, there is a risk that customers will not purchase them in sufficient quantities or at high enough prices to recoup our investment."

On top of all this Telstra is facing rapid declines in traditional revenues brought on by alternatives such as VoIP and by the convergence of fixed and mobile communications services.

By the end of 2007 it should be fairly clear how well Telstra is progressing: it hopes to have sufficient coverage with its Next G network and to have migrated sufficient customers from the CDMA network to be able to shut that down in January 2008. On the IT systems front, as ITWire reported in October, Telstra's current plan is to migrate millions of consumer accounts off legacy IT systems onto the new platform in the third quarter of calendar 2007. It is going to be an interesting year.