By the numbers: BT predicts Telstra's future?

By the numbers: BT predicts Telstra's future?

Summary: A forced separation hasn't been the best news for BT. Can Telstra learn from BT's mistakes?

TOPICS: Telcos, Telstra

A forced separation hasn't been the best news for BT. Can Telstra learn from BT's mistakes?

Moves to see through the separation of Telstra's wholesale and retail arms are well advanced. If the whole thing is seen through next year, it will be seven years behind BT, which went through a similar separation in the UK back in 2005.

For BT, the result has been far from encouraging — total revenue has fallen sharply and it's struggling to hold its own. Profit (after tax) has wavered around the mark of 10 per cent of revenue. This is hardly the sign of a company going somewhere.

(Credit: BT)

What is interesting, though, is where BT has enjoyed the most success. You'd expect, faced with increased competition and no favours from their network arm, that BT retail would be struggling. The reality is that it's the division that's doing the best. Sure, revenue slid, but profits are up. In other words, faced with competition, they have become hellishly more efficient. Perhaps Telstra, too, will rise to the challenge.

(Credit: BT)

It's the areas where BT has struggled that should be setting off warning sirens for Telstra. The company is talking of new wholesale products and broadening their footprint overseas. These are the areas where BT has struggled — wholesale has seen its profits halved, and its global division is struggling to break even.

Whatever the magic answer for future growth, BT hasn't found it yet. It seems a big retail company is good at one thing: selling to the public. When push comes to shove, they can hold their own. But when it comes to new channels and distribution models, that's going to be the bigger struggle.

Topics: Telcos, Telstra


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • I don't think that Telstra is going to have that much of a problem. We have known for ages that their wholesale prices were inflated. You only have to look at the number of times that they have been referred to the ACCC. They must surely know that with the introduction of the NBN they are going to have to change there practices to remain competitive.
    Telstra wholesale is going to be receiving a rental dividend from the NBN and at the same time it will not have the expenditure on repair and replacement of the copper network which should put it in a much better position than BT wholesale I would think.
    • BT wholesale sells stuff not related to last mile access - backhaul, hosting, managed services etc. The access part is taken care of by OpenReach (which, incidentally, has failed to lift it's non BT revenue). So it's that other, future thinking, wholesale stuff that BT are struggling with and which, I suspect, Telstra will also find hard going.
  • With the removal of that great yoke of oppression (the fact that opponents can deviously attack Telstra and have destroying rules and regulation visited upon it) Telstra can now deliver a service to consumers at a price and quality that opponents can never match.

    With the level playing field a reality, thanks to Senator Conroy, and the removal of gigantic cost pressures, together with the cash injection from the NBN Co., Telstra will be reborn to the Australian public and will continue as the favourite provider and innovator for the new technology that will engulf Australia.

    The most important task for Telstra will be, as David Thodey has rightly identified, the delivery to customers of a customer service that is unchallenged by Telstra opponents and will place Telstra at the absolute forefront of all others in the Industry and will cause a complete and utter change to every opponent of Telstra.