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