Network disruptions to cost as Telstra admits fix too late for some

Telstra chief Andrew Penn has conceded a string of network disruptions is going to prompt some customers to walk away.

Telstra chief executive Andy Penn. Picture: Hollie Adams

Telstra chief executive Andrew Penn has conceded that a string of network disruptions is going to prompt some customers to walk away, prompting the telco to pump $250 million into fixing the problems, which have resulted in millions of people being unable to make calls.

With the funds designed to make Telstra’s mobile and landline network operations more ­resilient, Mr Penn acknowledged the telco’s reputation on relia­bility had taken a beating.

“I fundamentally believe that we have the best network in Australia and we need to continue to invest in it and do the right thing by our customers, but I am sure that some of them are frustrated and may leave as a consequence,” he said yesterday.

“I’m convinced that our network has the best coverage and delivers the best experience but there’s no doubt the issues we have had in the last three months has left customers disappointed.”

The frequency and severity of the glitches on Telstra’s network has been unprecedented in recent history. While not quite on the scale of Vodafone Hutchison Australia’s network meltdown in 2010, which cost the mobile operator more than 2.5 million customers, the six outages have nevertheless raised question marks about Telstra’s management of the network.

In February, the telco blamed human error for an incident that left more than two million mobile customers unable to make calls or use data. In mid-March, a fault in an ­undersea cable resulted in eight million customers having mobile call and data dropouts.

Mr Penn rejected claims Telstra had cut corners on ­invest­ment in its network until now. He said the outages were a reflection of how much harder the network was having to work and how much more load it was carrying. “The number of incidents hasn’t actually increased: what has ­happened is that we have had an unfortunate number over the last few months that have had a wider-spread impact than what has previously been the case,” he said yesterday.

The six major outages, dating from February, have severely under­mined Telstra’s claims to be a premium network operator. Its customer satisfaction ratings have also taken a hit. Telstra is unlikely to meet its full-year net promoter target and said executive bonus incentives, which were tied to customer satisfaction ­levels, would not be handed out.

Forty per cent of Mr Penn’s variable remuneration is tied to customer satisfaction and he stands to lose his bonus if Telstra fails to reach its full-year target.

The $250m investment over the next six to 12 months will see a $100m upgrade of the core network, another $100m deployed to increasing ADSL broadband on the fixed network and $50m for the mobile network.

Telstra invests roughly $4 billion a year on its networks and has 16.9 million mobile customers. Optus has a mobile customer base of 9.37 million while Vodafone has 5.44 million customers.