NBN has given Telstra 'the gift of urgency': Elop

The revenue lost from the NBN, and the contracts that can be made with the company rolling it out, is a 'gift of certainty and urgency', former Nokia CEO and now head of Telstra Innovation Stephen Elop has said.
Written by Corinne Reichert, Contributor on

The impending customer and profit loss to the tune of billions of dollars as a result of the National Broadband Network (NBN) rollout is a burning platform for Telstra, with group executive of Technology, Innovation and Strategy Stephen Elop calling this a "gift".

Speaking from the prism of disruption leading to business transformation, Elop said the NBN is having "a remarkable impact" on the future of Australia's telecommunications industry, with two major impacts on Telstra specifically.

"When I think about NBN, I really boil it down to two points of interest. The first, for Telstra and Telstra's owners -- the shareholders, which is very heavily people of Australia -- AU$2 to AU$3 billion of profit are going to disappear from Telstra in the next few years. Those are big numbers anywhere in the world," Elop, speaking at the Telstra Vantage 2016 conference on Thursday morning, said.

"I look at that as a gift. It is a gift of certainty and urgency. There's no ambiguity that Telstra must be thinking aggressively, investing aggressively, and moving forward aggressively to define its future, because that is really going to happen and it's really going to change.

"The other point of interest as it relates to NBN is because of the loss of profits, there are payments flowing to Telstra. Money. And it's an opportunity for Telstra to think about how best can we serve our customers, what investments can we thoughtfully make to better serve you as we go forward into the future. So NBN is giving us two remarkable opportunities of which we need to avail ourselves.

"NBN has given us the gift of urgency."

Telstra has taken full advantage of the NBN rollout by selling off its hybrid fibre-coaxial (HFC) network and legacy copper assets for AU$11 billion.

In December, NBN then signed a memorandum of understanding that saw Telstra pick up design, engineering, procuring, construction, and maintenance within the HFC network, as well as undertaking to upgrade the HFC network to DOCSIS 3.1; and in April, NBN awarded Telstra a AU$1.6 billion contract to provide design and management services of the HFC network until 2020.

Last month, the Australian Competition and Consumer Commission (ACCC) said that the contracts won by Telstra to construct and upkeep NBN's HFC network are so beneficial as to possibly give Telstra a "head start" in selling NBN services, gain preferential service activation and fault handling, and attain more insight into the rollout.

For Telstra's future success in the market, Elop said that partially due to Australia's physical positioning in the world, the telco is continuing to focus on being a curator more so than a creator of technology.

"Because we find ourselves on an island, both literally and figuratively, we have the opportunity and the obligation to help all of our customers find better ways based on technology from all over the world, and so we have found ourselves effectively curating technology from all over the world and into Australia for the benefit of our customers," Elop said on Thursday.

"Yes, we do creation, we advise, hopefully we inspire you from time to time, but very clearly we have historically and will in the future be successful at curating the technology here."

Elop was added to the Telstra team in March, after the telco created the new role of innovation head. Telstra explained at the time that Elop will be responsible for leading the telco's "strategy to become a world-class technology company", based out of both Australia and the United States.

Elop had previously worked as president of the Microsoft Business Division and COO of Juniper, before becoming CEO of Nokia until Microsoft purchased Nokia's Mobile segment for $7.2 billion in 2013, and prior to Nokia's €15.6 billion acquisition of Alcatel-Lucent last year.

"Stephen will immediately add major firepower to our team with his extensive and deep technology experience and an innate sense of customer expectations," Telstra CEO Andrew Penn said at the time.

"He is a recognised international technology leader and strategist from across a range of global organisations."

The new "innovation" business combines the CTO, chief scientist, Software Group, and Corporate Strategy under one umbrella, with Elop saying in March that he welcomed the opportunity to work for such an "innovative" company.

"I have long recognised the Telstra team as one of the most innovative and insightful in the telecommunications industry," Elop said.

"Telstra has a strong focus on its customers, and a willingness to invest in advanced products and services to best serve those customers."

Disclosure: Corinne Reichert travelled to Telstra Vantage in Melbourne as a guest of Telstra

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