Tuesday, October 27, 2009

Telstra Updates Strategy, Confirms Financial Guidance

Telstra confirmed its financial guidance for 2009/10, reiterating that it expects to achieve free cash flow of $6 billion, low single digit growth in revenue, EBITDA and EBIT, and maintain its EBITDA margin.

Telstra's newly appointed CEO, David Thodey, said his strategy refresh would not lead to a fundamental change in the company's direction, but that recent investments in upgraded technology should now be used to substantially improve customer service, expand further into developing and adjacent businesses, and offer online applications that are valued by customers. The company also confirmed that its four year-long transformation has largely been completed, giving Telstra world-class IT systems, platforms and infrastructure - like its Next G and Next IP networks.

Specifically, Thodey told investors that Telstra would take advantage of its recent network and IT upgrades to:

  • Substantially improve customer service by making it faster, easier and simpler for customers to deal with Telstra.

  • Move 'up the value stack' by participating in the profitable and fast-growing markets for online content, applications, products and services.

  • Expand further into adjacent and complementary markets like IT storage, security and web-hosting that support the growth of enterprise, government and small business customers.

  • Add value to fixed-line telephone services with devices like T-Hub, a new touch-screen home phone that combines telephony, Internet services and a media player.

Thodey said Telstra supports the Australian government's NBN vision, but that any deal must be in the best interests of the company and its shareholders. He will not agree to proposals that "fail to give fair value for Telstra's assets." Thodey said the issues of functional and structural separation are complex and the government's proposed timelines are not yet clear, but that Telstra remains in constructive discussions. Several outcomes are possible.

Mr Thodey also confirmed that Sensis and Telstra Media remain core assets and are performing well, and that Telstra would further develop its new media businesses in China and selectively invest around its Asian businesses.

"Despite Telstra's strengths we do not take our success for granted, but we believe that technology leadership and improved customer service will help us win and retain customers, grow the business and deliver shareholder value," Thodey said.

A webcast of the investor conference is online.