Thodey 'vigilant' in fortifying Telstra customer base

As the number of new customers joining Telstra slows, CEO David Thodey has said the company is ensuring its existing customers don't begin looking around for something better.
Written by Josh Taylor, Contributor

Over the past four years, millions of Australian consumers have flocked to Telstra's mobile network in droves. CEO David Thodey now needs to stop those customers from looking for greener pastures.

As of the end of December 2014, Telstra had 16.4 million mobile subscribers. This is more than the last reported figures of both Optus and Vodafone combined.
David Thodey
(Image: Josh Taylor/ZDNet)

Under Thodey's helm, Telstra went from being the expensive mobile network that customers chose because they needed coverage everywhere to being the moderately expensive mobile network of choice.

Over the past five years, Telstra has added more than 5 million mobile subscribers to its 3G, and now 4G, networks, but in the last two halves, that growth has begun to slow.

The result is still impressive; 366,000 in the last half is likely more than either Optus or Vodafone could achieve during the same period, but it's not close to the 1.6 million annual customer growth that Telstra saw in 2011.

Much of the company's gains over the past five years can be laid at the feet of Vodafone's network issues in 2010, and Optus' failure to capitalise on them. But even so, Vodafone's customer declines only account for about half of the customers who went to Telstra.

Another factor is that Telstra's growth coincided with the rise of tablets, and the use of Wi-Fi hotspots or dongles, helped along by the billion-dollar rollout of Telstra's 4G network providing speeds that beat the ADSL network.

While both Optus and Vodafone have invested heavily in their own 4G networks, and undercut Telstra significantly on data offering and price, the two companies have yet to see many customers return.

The first signs have come after the iPhone 6 launch, with Optus on Thursday reporting 100,000 new subscribers in the last three months of 2014. Vodafone, which will have its first results for the last quarter released next week, has been quietly confident of its own numbers after years of decline.

At a press conference on Thursday, Thodey admitted that there had been some churn away from the telco, but said it was still a "world-class" churn rate.

"The 366,000 net new was still a good result. Yes, it wasn't the same as it was a year ago, but in anyone's language, that is a good result," he said.

Telstra's focus has been on retaining those customers who joined the telco in the past two to three years and are coming off contract.

"We've had 4.5 million users in the last three years or four [years]. And of course they were coming out of their contracts, so it was a very important period to make sure we put out an offer our customers wanted," he said.

Thodey admitted that some customers are moving around, but that this is not a reason for the company to drop its prices to that of its competitors.

"Yes, there's movement, but we continue to drive differentiation around our network and the speeds that we get, and the size of the network," he said.

"Some customers say, 'that's really worth a lot of money to us', but we never relax, and I would never, ever imply that it's not important that we look what's going on."

As Telstra reported AU$2.1 billion in profit for the first half of the financial year, Thodey said the bigger issue is around profitability for the industry.

"All players want to see a healthy business that allows them to reinvest. I'm very please to see Optus investing a lot of money in building out their network, and I'm sure Vodafone is doing the same, and that allows good competition on good fundamentals, because all of us have shareholders that need returns."

He said that Telstra would remain "vigilant" to ensure the company is competitive in mobile.

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