Telstra adding customers in every area but PSTN


Telstra might be Australia’s largest telco and the nation’s former incumbent, but you wouldn’t know it from the company’s customer growth, with the big T revealing today it continued to gain customers in virtually every area of its business — even in the hyper-competitive and highly regulated fixed broadband market.

The telco’s largest customer growth over the past 12 months, according to its financial results statement released this morning, was in the area of mobile broadband, where the company added some 914,000 customers over the past year to its flagship Next G mobile broadband network, which tests have shown has faster speeds and wider reach than that of its rivals.

Telstra also added some 645,000 new customers buying mobile phone services on a plan in the period, meaning it had gained 1.6 million total new Next G customers in the year.

The news provides a stark comparison with the fortunes of Australia’s other major mobile phone providers. In the past six months alone, it recently revealed, Vodafone’s overall customer base declined by some 375,000 customers, as with the besieged mobile telco still struggling to shake off poor customer sentiment stemming from its disastrous series of network outages in late 2010 and earlier this year, and a rash of re-classified customer numbers also taking their toll.

In the past twelve months, it revealed this morning during its own financial results briefing, Optus has added only a third as many customers on mobile phone plans. And Telstra has significantly more customers than Optus using mobile broadband — with Optus now boasting some 1.4 million mobile broadband customers, compared with Telstra’s 2.5 million.

Telstra also added customers in the period in the fixed broadband arena, an area where it has been traditionally losing market share over the past decade to fast-growing rivals such as iiNet, Internode, TPG and Optus, although Optus now appears more fixed on the less regulated mobile market.

Over the past 12 months, Telstra added some 158,000 new fixed broadband customers. That figure would actually have been higher, but the telco removed some 65,000 customers from its list for what appeared to be accounting purposes, as they were classed as “non-revenue generating”.

This organic growth dwarfs that of Telstra’s rivals. For example, in the six months through the end of 2010, iiNet added just 7,000 net new broadband customers in the period organically. Most of the ISP’s customer growth coming from acquisitions, such as its buyouts of AAPT’s consumer division and Melbourne-based ISP Netspace.

Telstra also sold some 659,000 bundled products in the period — packages of several services such as fixed and mobile services, or those buying its T-Box internet video set-top box and service. The company sold 365,000 combined T-Box and T-Hub units (although it didn’t break down today how many of each were contained in that figure).

The customer growth is not feeding through into substantial top-line revenue growth, however, with Telstra reporting only a meagre 0.7 percent increase in total revenue growth over the past year, with net profits after tax sliding 16.8 percent and earnings before interest, taxation, depreciation and amortisation also slipping 6.4 percent.

Much of the difficulty for Telstra is the continued fall in revenues from its traditional fixed line telephone business — the revenue the company generates from that division sank $462 million in the past year, as customers transitioned to new digital product lines. Its fixed line telephony business remains one of its most profitable, however — with a 59 percent EBITDA margin, as opposed to only 32 percent on its mobiles division, for example.

However, Telstra did generate free cash flow of $5.5 billion during the period, with $3.5 billion of this being made up in the second half of the year.

According to its presentation, Telstra’s priorities continue to be improving customer satisfaction, retaining and growing its customer base, simplifying its business and investing in new growth businesses such as its cloud computing operations.

Over the next 12 months, the company expects total revenue and EBITDA to increase in the low single digit percentages, with generated free cash flow to be between $4.5 billion and $5 billion. Telstra chief executive David Thodey slated to hold a media conference in Melbourne on the results later this morning, with the company’s full results briefing being available for download online.

Image credit: Telstra


  1. Okay. If that’s really your intention I do apologise but given your history and irrelevant nature of the comment I was suspicious.

    Further as an intelligent individual you would realise this and would have indicated this at the first instance rather than pointing out the fact that the NBN has no Telstra customers as yet, a fact actually mitigated by the contractual obligations of Telstra to migrate customers. The statement in question also isn’t relevant to this article.

    Nevertheless I withdraw my statement accusing you of trolling in good faith.

  2. Is this a new Whirlpool like ‘feature’, you can say someone else’s post is ‘trolling’ and get it deleted?

    I just thought it was a harmless spoof on the term PSTN tinged with some fact, but I suppose you didn’t want to risk it drifting into yet another NBN discussion,never mind it’s your show it’s not important.

    • hey Alain, FYI I have a new commenting policy on Delimiter. I’m tired of massive ranting, trolling and bunfights every single day. From now on the policy is that people will be polite, or else I will delete their comments.

      We have had too many violent comments which have scared away readers from commenting, so I’ll be actively moderating as much as possible now, with a view to focusing on politeness.



      • I think the main reason for the “bunfights” is because certain people here are unable to read the articles and stick to the topic mainly because they’d rather cover old ground and try to win a previous argument they already lost. Perhaps if you had some kind of forum these sorts of discussions could play out a bit better and it would leave the article comment sections uncluttered :-)

        • lol true :)

          I have noticed you’ve been starting new threads in the forums HC. Cheers, I really appreciate it! It’s a great way to focus the debate, and actually it does seem as if the forum comments are a lot more civil so far. I’ll be focusing on this area quite a lot myself over the coming months.

          • i dunno…..

            everytime i load delimiter and glance on the left panel, my eyes immediately focus on “Turnbulls Idiocy” and “Hall of Shame”.

            very tabloid and a la Derryn Hinch.

          • Well this particular WordPress blog is being cleaned up, the bunfight and trolling it seems has just moved into forums.

          • Don’t be a hater just because I know how to give my forumtorials accurate and descriptive titles. See even you are uncontrollably drawn to them and it’s not just because you hang off my every word the titles enchanted you.

  3. dear gentlemen,

    might we humbly consider the probable future impact of the ACCC’s proposed consolidation of band 1/2/3 ESAs into a single band priced at $16.75/mth?

    i would most respectly suggest that: while this proposal, along with the implementation of a uniform wholesale rate card, will undeniably result in “fairer competition” at the retail level by placing Bigpond on the same (lower) cost footing as Telstra’s competitors, it will also result in further downwards pressure on Bigpond pricing and, ultimately, play in favour of the incumbent as broadband subscribers churn in greater numbers towards Bigpond.

    might a reasonable observer conclude that this will be detrimental towards competing ISPs which will no longer possess any meaningful points of competitive differentiation from the incumbent? after all, despite the nebulous arguments put forth about “innovation”, isn’t “ADSL broadband” ultimately a commodity in today’s market?

    this is certainly a most exciting future development that awaits the market.

    kind regards

    • Kind sir, is this not the way of any commodity market?

      Unless an entity can diversify itself from its competitors by finding a unique niche it will ultimately fail to the entity that can sustain the lowest margins, which naturally in the Broadband market is the incumbent.

      It is this innovation that you speak of that will ultimately allow smaller players to exist in the market, and also what caused them to come to be in the first place. Obviously since Broadband is a commodity, this innovation must come about in other forms in order for any entity to truly seperate itself from the incumbent.

      The fact of the matter is the incumbent will always have an advantage. So I ask you, what do you find exciting about the natural flow of things in a commodity market?

      Shouldn’t you instead be focusing on the actions others take in order to maintain their unique niche via innovative advancements? I find that far more exciting.

      • *Kind sir, is this not the way of any commodity market?*

        all i’m saying is the current state of play in the fixed-line market is completely “artificial”. the only reason many of these small ISPs even exist is because of the “arbitrage opportunity” presented by the ACCC in enforcing “geographically de-averaged ULL pricing” which allows Telstra’s competitors to exploit the difference between “bitstream pricing” and “unbundled pricing”.

        some of Telstra’s competitors are still whinging about Bigpond’s last retail plan changes which happened a year ago. as band 2 ESA pricing of $16/mth expands to incorporate a further chunk of the market and “unbundlers” like TPG move in, Telstra will be forced to revise Bigpond pricing once more to retain market share. without knowing the full details of the $11bln NBNco deal (which is a “Labor state secret”), the network preference deal (which presumably offers them a bounty per head of subscriber migrated over to the NBN) incentivises them to GROW market share.

        in any event, “bitstream pricing” and “unbundled pricing” are likely to further converge. once you factor in the fabulous product bundles that Telstra is in a unique position to offer vis-a-vis their competitors, one can only imagine who the customer churning trends will favour.

        *Unless an entity can diversify itself from its competitors by finding a unique niche it will ultimately fail to the entity that can sustain the lowest margins, which naturally in the Broadband market is the incumbent.*

        right now, the “lowest margin operators” are the “unbundled” access seekers who do not bear the burden of servicing the massive capital costs of the copper network (i.e billions of dollars of periodic dividend and interest obligations). as “bitstream” and “unbundled” pricing converges, these competing ISPs will lose their cost advantage.

        *It is this innovation that you speak of that will ultimately allow smaller players to exist in the market, and also what caused them to come to be in the first place.*

        what innovations have smaller ISPs demonstrated aside from being experts at arbitraging and gaming the regulatory straight-jacket imposed upon the incumbent?

        “naked ADSL” is just bitstream/unbundled pricing arbitrage — it’s not a natural “market” phenomenon (let alone, “innovation”), but an artificial creation of the ACCC. (note how the NBN has no equivalent “unbundled” product with concessionary access charges.)

        Telstra’s capping of ADSL1 speeds, delay in activating ADSL2, competitor installation of Annex A/B/C/M/N/X/YZ, etc….. all those issues are more complicated but also essentially revolve around protecting the integrity of TW’s bitstream aggregation and pricing model.

        *Obviously since Broadband is a commodity, this innovation must come about in other forms in order for any entity to truly seperate itself from the incumbent.*

        what differentiating “innovation” is there in terms of the network side of things? the entire access network in terms of topology, backhaul to POIs, upgrades, traffic classification, management and pricing (incl. QoS standards and provisioning), etc is all determined and controlled by NBNco. you think the smaller ISPs have a superior “core” to Telstra? (LOL.)

        *Shouldn’t you instead be focusing on the actions others take in order to maintain their unique niche via innovative advancements? I find that far more exciting.*

        let’s see…. iiNet and Internode introduce “FetchTV”….. and Foxtel takes over ASX-listed Austar. hmmm…. that’s like watching someone pointlessly shuffle his rook up and down the sides of the chessboard while Kasparov swiftly decimates and controls the centre. that’s fun to watch :)

        because the NBN is so expensive to use, all the “profit margins” from selling “internet products” will essentially disappear. (NBNco’s wholesale margins will absorb existing ISP retail margins.) access seekers will instead have to make their money from offering value-added services and “loss lead” on “plain vanilla internet access”. it’s a game of scale — small ISPs have no reason to exist. yea, i’d love to see Eftel do a reverse takeover of News Corp, Google or Disney — like that’s gonna happen.

Comments are closed.