Home > Latest Reviews > Wireless & Networking > 5G > COMMENT:Telstra Deliver A Shocker But Is 5G Their Saviour?

COMMENT:Telstra Deliver A Shocker But Is 5G Their Saviour?

Telstra love to brag how good they are, but their latest results are a shocker, with the Company now banking on 5G to pull them out of a hole that is getting slippery and bigger every day.

Their reputation has been tarnished because they are struggling to deliver consistent network service and support for their customers, they have also slashed over 8,000 jobs across their operation, and this is starting to show.

Telstra CEO Andy Penn says 5G should halt the decline in average revenue per mobile user. This is wishful thinking on Penn’s part as 5G is going to be expensive and limited.

The early 5G handsets will have an interim Qualcomm processor that will only deliver certain capabilities. At the same time 5G will only be available is select locations with consumers defaulting to a 4G network when a 5G tower is not available.

Personally, I believe that it will be late 2020 before we see second generation handsets and a wider 5G network in Australia.

Right now, Telstra is suffering a squeeze on profit margins as competitors strip Telstra customers away with cheaper NBN deals.

Right across the board Telstra’s market share is being eroded and the glory days when the Company was perceived as the best kid on the block to deliver 4G, as well as mobile and home broadband services is well and truly over for Telstra.

Today it’s more about holding onto customers because new customers are going elsewhere, brands such as Kogan, Aldi, Woolworths are signing up new customers despite these brands using the Telstra network to deliver their services.

While the Company added 239,000 post-paid mobile services in the half year, mobile broadband revenue declined by 9.1 per cent to $350 million during the half after the Company lost 170,000 customers in the half.

Telstra’s profit margins went backwards in mobile, fixed line and in network application services, which was once heralded as one of the key businesses of the future at the country’s biggest telco.

Adding to the pressure on profit was the decline in the average revenue per user in fixed line retail (minus 3.4 per cent), mobile post-paid (minus 2.4 per cent) and in mobile broadband.

According to the Financial Review the upside for Penn is that Telstra has now absorbed $1.7 billion of an estimated $3 billion in negative impact on profits from the NBN rollout. The NBN roll out is now half way completed, which means Telstra shareholders have passed the peak NBN pain point.

While Penn is confident that Australians will be willing to pay more for a mobile technology that allows faster downloads and has the potential to replace the fixed line NBN in households others are not so sure with new W6 Wi Fi technology set to expand the reach of home NBN networks.

During the year Telstra has collected $1.6 billion in taxpayer subsidies these are being handed out to compensate for the loss of its fixed line monopoly. This gives Telstra a major advantage over rivals.

The compensation comes in the form of equipment rental, services performed, and straight handouts agreed to when the then Telstra boss, Sol Trujillo, refused to co-operate with the government in 2008, prompting the rollout of the National Broadband Network.

Telstra boss Andy Penn says margins on reselling the NBN have fallen to zero and he puts the net loss to Telstra in the last half at $1.6 billion.

The biggest issue is that Optus, Vodafone and what could be a merged Vodafone TPG operation are not going to deliver Telstra an easy run. They are set to be competitive in delivering 5G and will force Telstra to spend tens of millions marketing their offerings while also delivering competitive
pricing that could a discount war emerge with carriers.



You may also like
Telstra Drastically Cuts Back On Problem Legacy Platforms
Does Telstra Love Losing When It Comes To Streaming? Now Developing A TV OS Despite Foxtel Share Ownership
Telstra Owned Fetch Has Developed Their Own TV OS
Telstra Builds Microwave Link Across Bass Strait
Lynk Global
MWC: Telstra To Test Texting Via LEO Satellites