Mobile Phone War Tipped As Telstra Target Optus

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Telstra, who has admitted that they are not travelling well in the mobile phone market despite 8 percent growth, is set to get aggressive and target both Optus, who yesterday reported a 22 percent profit rise, and Vodafone.

At yesterday’s analyst briefing, Telstra CEO David Thodey said that Optus was doing a better job selling mobile phones than Telstra. He also admitted that that margins on the sale of mobile phones fluctuated between 30 and 35 percent, which leaves Telstra with plenty of margin to start a price war.

Telstra said that the amount of time spent on mobile voice calls rose 5 percent to 11.5 billion minutes, which is significantly higher than the time consumers spent on a fixed line phone.

Currently Telstra has 10.6 million phone customers, a rise of 3.6 percent. They also have 3.99 million broadband customers.

The biggest growth for the struggling carrier was a 58 percent surge in wireless broadband customers to 1.65 million.

While several media organisations are painting a picture of doom and gloom for the carrier after its shares plunged 9 percent, analysts are not as pessimistic.

“The result is fairly good. Telstra has made its cashflow target, and revenues in broadband and mobile did pretty well in the second half so that was the good news, but the market was obviously very disappointed in next year’s guidance, which is why the stock has come off,” Investors Mutual director, Anton Tagliaferro, told the Australian newspaper.

There was also a silver lining in Telstra’s results as it hit its the much vaunted target of $6bn free cashflow by 2010, one of just a handful of targets set five years ago by Mr Thodey’s predecessor, Sol Trujillo, as part of a $20bn project to transform the business.

Thodey said that he was set to draw a line in the sand and move Telstra from being an infrastructure company to a customer- centric organisation. He also said that several new products were in the pipeline with one product set to be an IPTV service that delivers content to a TV without the need for a set top box.

 

“We need to make a very important strategic decisions for this company,” he said.

“The greatest asset that Telstra has is our customer base and we have been losing too many customers.

“We cannot allow it, and I won’t allow it to continue.”

Mr Thodey said the company would embark on a new investment strategy to simplify the business and improve customer service, and would invest heavily in new sales and marketing capabilities to increase and maintain market share.

Mr Thodey said Telstra’s new strategy would not depend on the outcome of the election. “We are non-partisan when it comes to politics and we will work with either side of government,” he said.

“What’s most important for us is about our customers and acquiring customers. That’s what we’re going to focus on.

When asked how he was going to vote in the upcoming Federal Election, he said “I’m going to vote for our customers.”

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