Telstra declares improvements after ‘unacceptable’ outages

Telstra says any move to regulate mobile roaming will be at the expense of shareholders, and be bad for regional users.

Outages “had a wider impact than is acceptable”, says Telstra CEO Andrew Penn. Pic: Stuart McEvoy.

Telstra chairman John Mullen has warned that any move to regulate mobile roaming will come at the expense of the telco’s shareholders.

Speaking at the telco’s (TLS) annual general meeting, Mr Mullen said the Australian Competition and Consumer Commission’s (ACCC) declaration inquiry into mobile roaming raised the prospect of giving Telstra’s competition a free ride on its network.

“Since privatisation Telstra has spent many billions of shareholder dollars on building one of the world’s largest and best network,” Mr Mullen said.

“Simplistically, this is equivalent of an airline wanting to provide services in regional Australia but instead of investing in its own planes to make seats available it pushes for regulation to force another airline to reserve half the seats in its planes.

“If the ACCC decides to declare mobile roaming it will absolutely be at the expense of you, the Telstra shareholders, and it will also bad for Australians in regional areas,” he warned.

Telstra chairman John Mullen

Telstra chief executive Andrew Penn added that future rounds of the federal government’s mobile black spots program would be put under threat by regulated roaming.

“We are very pleased to be participating in round two of the government’s mobile black spot program, however, future rounds of this program will be threatened by roaming,” Mr Penn told shareholders.

Telstra and Vodafone Australia, the chief proponent of regulated roaming, have secured $185 million in government funding to help build or upgrade 499 mobile towers across Australia. Telstra is building 429 towers and also installing small cells in 135 regional sites to deliver 4G services. The government announced the second round of the program in December 2015, putting another $60m on the table for interested telcos.

Telstra earlier reaffirmed its full-year guidance at its annual general meeting in Sydney while tagging this year’s raft of network outages as an “unacceptable” outcome for customers.

The telecommunication giant’s customers endured seven significant outages through the first half of calendar 2016, ultimately leading to a ramp-up in capital investment from Telstra and the departure of high-profile executive Kate McKenzie in July.

Mr Penn said the complexity of its network meant issues were inevitable, but the extent of disruption this year was excessive.

“Telstra’s network in Australia includes approximately 230,000kms of optical fibre cabling, 170,000 routers and switches, over 8,500 mobile network sites and more than 5,000 exchanges. With this level of complexity, occasionally issues do occur,” he said.

“However, these interruptions had a wider impact than is acceptable and we have apologised for that.”

Mr Penn said the telco had pursued an intensive review into the problems plaguing its network through 2016, leading to an immediate $250 million program of investments.

“We are well progressed with this program and have already substantially improved our mobile network recovery times,” he said.

“In parallel we have continued to build our network capabilities. This work is critical because all of us are relying more and more on smart devices, smart technologies and fast connectivity every day.”

Mr Mullen, Telstra’s chairman, said despite the outages, there was “nothing inherently wrong” with Telstra’s core networks.

He said the company’s infrastructure has already been rated “world-class” by independent global experts.

Telstra restated guidance for mid- to high-single digit income growth in fiscal 2017 and low to mid-single digit earnings before interest, tax, depreciation and amortisation growth.

Mr Penn added that strong returns for investors would continue despite a radical shake-up of the telco sector in Australia as the national broadband network rollout proceeds.

“This is an exciting time for Telstra — we see a great future for your company as accelerating technology innovation drives a world of rapid change and new opportunities,” he said.

“We need to take advantage of these opportunities at the same time as addressing the very considerable challenge of the $2—3 billion negative impact on our EBITDA from the migration to NBN.

“The ultimate mark of our success will be the quality of the experiences we provide for our customers.”

Meanwhile, Telstra’s Singapore-based director Chin Hu Lim is leaving the telco, citing family commitments. Mr Lim was a non-executive director at the telco since August 2013 and joined the board in October 2013.

Mr Lim said that he informed the telco of his decision to step down two months ago.

“For personal family reasons I have decided to travel less and spend more time with my family in Singapore,” he told Telstra shareholders at the AGM.

Mr Lim an experienced operator in the Asia-Pacific region is the managing partner of Stream Global Pte Ltd, a venture fund providing seed funding for technology start-ups.