By the numbers: Telstra's results are too good
Figures from Telstra's annual results, released last week, show that every man, woman and child in Australia on average pays the company AU$94 per month, whether they're a customer or not. It seems an extraordinarily large amount, even if it's not all direct revenue from consumers; there's wholesale, business and government revenue, as well as returns from Foxtel and other investments, too.
Our collective contribution to Telstra's success has fallen a little over the years. The AU$85 each paid in 2002 would equate to AU$110 today, so, in real terms, the figure has dropped by 15 per cent. That's to be expected for an incumbent telco facing the challenge of increased competition. The question is: how much farther will Telstra drop?
(Credit: Phil Dobbie/ZDNet Australia)
This graph shows revenue per capita, in actual terms, for 2002 and 2012 for BT (UK), Telecom NZ (New Zealand) and Telstra (Australia). The figures have been converted to US dollars for direct comparison based on today's exchange rate. It's clear that Telstra is doing significantly better than the incumbents in the other two markets — its revenue per capita is almost twice that of BT's. We can also see that Telstra is not facing the downward pressures felt across the Tasman, where separation and competition are having a marked impact on Telecom NZ's revenue.
So, does this mean that Telstra's results are too good? They would not have been so positive without the contribution made by the mobile network, which added 1.6 million new customers in the last year (to a total of 13.8 million customers).
What if, over time, Telstra's revenue performance was to slide to BT levels? That would be an extra US$12 billion of revenue thrown open to the rest of the market. To give some context, that's 17 times iiNet's revenue last year.
This gives an indication of the damage that could be done to Telstra by increased competition brought about by the National Broadband Network (NBN) or some other form of structural separation. Telstra's results look good this year — and its guidance for next year is for further growth — but how long can this situation continue when its dominance is clearly out of kilter with other deregulated telco markets?