Telstra says call centres must improve

Telstra CEO David Thodey has conceded that the company needs to look at the quality of its call centres, but intends to continue increasing the use of its offshore providers.

Telstra has admitted that it still has a lot of work to do when it comes to improving the quality of service out of its international call centres.

However, it will continue to increase the use of global providers at the expense of its Australian call centres.

Speaking to shareholders at the company's annual general meeting (AGM) in Brisbane on Tuesday, chief executive David Thodey said this is for economic reasons.

He said that shareholders had raised the issue of the quality of the service offered by international call centres.

"As a business, we have a responsibility to consider the economies of scale offered by global providers, along with the flexibility that gives us in managing fluctuating call volumes at different times of the year," he said.

"This means that our contact centre work here in Australia is declining, and will continue to do so," he said. "We have implemented many initiatives to improve the service we offer our customers, though we still have much to do."

In July, Telstra announced plans to move 671 of its Australian jobs and contractor roles into Asia, starting from September, with a spokesperson at the time saying that for the company to compete effectively internationally, it needs to "have resources in the region and the capability to scale rapidly to meet demand".

At the AGM, Thodey said the company is "committed to building Telstra into a business that has the customer at the centre of every decision, every action, every opportunity, every day".

Telstra has attracted controversy by asking the competition regulator to approve a wholesale price rise in response to falling demand on its copper network, as the National Broadband Network increases the migration of customers away from the service.

Thodey said that Telstra "remained committed to acting in the best interests of you, our shareholders, and to maintaining the value of the current agreements".

Telstra's rivals, such as Optus, argue that it is already being compensated through an AU$11.2 billion deal with NBN Co and the government to rent out its infrastructure to build the network.

Thodey also said that Telstra expects continued low single-digit income and earnings before interest, tax, depreciation, and amortisation (EBITDA) growth as demand for connectivity in Australia and overseas grows.

"Looking ahead, in 2015, Telstra expects continued low single-digit income and EBITDA growth to offset the absence of CSL 2014 operating revenue and EBITDA," he said. "As a result, after excluding the AU$561 million profit on the sale of CSL in 2014, Telstra's income and EBITDA guidance for 2015 is broadly flat."

However, Thodey said that growth demand for connectivity would offset the loss of income from the sale of its CSL Hong Kong business.

The company increased net profit by 14.6 percent in fiscal 2014 to AU$4.3 billion, and expects 2015 free cash flow of between AU$4.6 billion and AU$5.1 billion, and capital expenditure to be around 14 percent of sales.

On October 6, Telstra announced that it had bought back more than 217.4 million shares from shareholders in an AU$1 billion share buyback, a move at which some smaller shareholders at the event in Brisbane expressed concern, claiming that they had not seen an increase in share value.

However, Telstra chairman Catherine Livingstone stood by the move, saying that the decision was taken in order to provide benefit to all shareholders.

"In terms of the buyback, Telstra has capital management strategy, we do have excess capital at the moment, so the board formed the view that a small buyback was in the interest of all shareholders, as opposed to paying down debt," she said. "Buybacks benefit continuing shareholders, because it reduces the shares available and so increases the value of the shares."