Telstra boosts mobile network funding by AU$500m

Telstra CEO Andrew Penn has committed to increasing Telstra's network funding for the next two years to 15 percent of sales, with over AU$5 billion worth of investment.
Written by Josh Taylor, Contributor

In his inaugural keynote address as the new CEO of Telstra, Andrew Penn has committed to increasing capital expenditure on building its mobile network by an additional AU$500 million over the next two years.

Penn, in a speech to the Committee for Economic Development of Australia (CEDA) in Sydney on Thursday, made similar commitments to the company's future direction as those of his predecessor, David Thodey, in making Telstra a global technology company backed by investments in cloud services, startups, health, and the company's national mobile network.

Penn said he is committed to ensuring that Telstra, Australia's largest mobile network company, continues to have the best coverage in Australia.

"We will increase our total capex investments to 15 percent of sales for the next two years, providing more than another half a billion dollars for mobiles," Penn said.

"In total, over three years to June 2017, we expect to have invested more than AU$5 billion into Telstra's leading mobile network.

This will see Telstra's 4G footprint reach 99 percent of the population. Optus' 4G footprint as of the company's last results sits at 86 percent of the Australian population. Vodafone has yet to disclose their 4G footprints outside of metropolitan coverage.

Penn said this would lead to an overall network footprint of 2.5 million square kilometres, which he said "is around double that of our nearest competitor".

The extra funding will see 750 new base stations built, giving the telco more than 9,000 sites across Australia, and over 750 small cells.

The company also plans to upgrade 4G, with voice over LTE, LTE Broadcast, and LTE Advanced, Penn said.

"By fully leveraging our superior spectrum holdings, we will create new levels of coverage and performance leadership for 4GX," he said.

Telstra received AU$165 million in funding from the Australian government's Mobile Blackspots Program last month, and Penn took aim at rivals Optus and Vodafone's complaints about Telstra partnering with the government to gain a competitive advantage in mobile in regional Australia.

"There is a lot of noise from our competitors about the fairness of Telstra's superior mobile network. But it is there because we have had the vision and we have been prepared to invest," he said.

"Let's face it, all three operators have the capacity and the balance sheets to invest. The only difference between us is Telstra has consistently been prepared to do so."

He said Telstra is funding 90 percent of the capital input from the industry to support the government-funded blackspot program.

Penn also highlighted the company's AU$100 million Telstra Air Wi-Fi network, and working with Google to trial balloon Wi-Fi as an example of the company's commitment to network coverage.

Thodey had often referred to Telstra as a global technology company, with customer at the centre. Penn's speech drove home plans to continue that plan, while also recommitting to the company's role as Australia's largest mobile telecommunications provider.

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