Telstra maintains unprofitable Health business has had success under the covers

The Telstra chair has said that if the company wasn't confident it was the right business to be in, it would cut it.
Written by Chris Duckett on

It might take longer than some people would like for Telstra Health to become a profitable arm of the company, but chair John Mullen has said that Telstra is confident that it will be.

"Telstra Health hasn't hit everything we expected it to do, but it's a startup business ... in a new area, we're bound to make some mistakes, we have made some mistakes, but we have also made a lot of successes," Mullen told the company AGM on Tuesday.

The chair said the telco's health business has had success "under the covers", and handles 260 million prescriptions annually, has 22,000 GPs and 35,000 pharmacists on its systems, as well as 10 public hospitals using its patient flow and queue management software.

"We are the largest health software technology provider already, employing about 800 health professionals, and we are embarked on some very major projects like the National Cancer Screening Registry," he said.

"It's exactly what we should be doing as a company; we should be taking risks that pay off -- sometimes they don't, sometimes they do -- but no one will affect the future of the company completely."

Mullen cited Telstra's network applications and services business as being in a similar position previously.

"It lost money and there was a lot of questioning whether we should be in this or should we not. Now, you look at where it is, over a AU$3 billion business growing at 30 percent per annum, and the margins have more than trebled since we started," he said.

Telstra Health picked up the AU$220 million National Cancer Screening Registry contract for five years in May 2016.

Under the terms of that deal, Telstra Health was responsible for creating a database of cancer records for those who have been screened for bowel and cervical cancer, with patients and doctors able to access the register online. The register integrated eight existing cervical cancer registers and the bowel cancer register, with more than 11 million separate records being amalgamated onto a single platform.

This was followed up in February with Telstra Health picking up deals for regional health services management in Western Australia, and getting its patient flow solution into Epworth Richmond Hospital.

Mullen said that if there was no prospect of Health being profitable, Telstra would exit the sector, but he said the business is on its way to becoming "very substantial".

"Very few businesses of scale make money from day one," he said.

"Yes, we don't get everyone right, and yes, it may take longer than everyone would like for something like Telstra Health to be profitable, but we are confident it will be, otherwise we wouldn't stay in it -- if it wasn't, we would cut it."

In prepared remarks delivered earlier to the AGM, Mullen said Telstra is taking the entrance of TPG into the mobile market seriously.

"TPG is and will be a formidable competitor -- of that there is absolutely no doubt," he said. "We do not underestimate the impact this may have, the effect on pricing, nor the fact that we must -- and most certainly will -- continue to invest heavily to maintain our mobile network superiority and continue to improve the experience we offer our customers."

Foreshadowing its planned announcement for next week, Telstra CEO Andy Penn said the company would be launching the next iteration of its Telstra TV product, which would see it support free-to-air TV channels as well as "universal searching".

For the full year to June 30, Telstra posted net profit of AU$3.9 billion, down 32.7 percent from AU$5.8 billion due to the AU$1.8 billion sale of its Autohome share included in the FY16 net profit. Excluding this, net profit was up by just 1.1 percent year on year.


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