Ziggy welcomes privatisation as Telstra revenues soar

Telstra has welcomed the re-election of the federal coalition due to its policy supporting the full privatisation of the carrier, with chief executive officer Ziggy Switkowski saying the board and management would like to "congratulate the government on their stunning victory".

Telstra has welcomed the re-election of the federal coalition due to its policy supporting the full privatisation of the carrier, with chief executive officer Ziggy Switkowski saying the board and management would like to "congratulate the government on their stunning victory".

Switkowski told a congregation of shareholders, analysts and the media at the carrier's first-quarter results announcement today that the "board and the management of Telstra have consistently agreed with the acceleration of the full privatisation of Telstra".

"To the extent that the re-election of the government increases the probability that this [privatisation] is going to happen, we welcome that and we stand ready to work with the government when they are in a position to suggest how this process is going to develop," he said.

Responding to questions on the telecommunications company's recent offshoring project with the US company Electronic Data Systems (EDS), Switkowski asserted that the 300 jobs lost in Australia did not come from Telstra.

"EDS has for the better half of ten years had a contract with Telstra to support the application and development and maintenance work of our billing systems, that contract is regularly reviewed," he said.

"EDS was proposing to do some work in their Indian operations and that ... led to a realisation that some number of their jobs will transfer to India, and these are not Telstra staff, these are obviously EDS staff who work on the Telstra contract."

"My observation from these sort of offshore initiatives in Australia in that while on the one hand jobs do get transferred offshore, on the other hand skilled IT people are in the main roles in the Australian operations, so the net losses are not as dramatic as sometimes the headline numbers suggest," he said.

Despite an impressive 4.2 percent growth in underlying sales and revenue for the telco's domestic and international business - totalling AU$5.244 billion - Telstra experienced a decline in the number of basic PSTN lines to 10.34 million, a drop of 30,000 access line numbers for the quarter.

However, Switkowski said the loss is in line with the trend Telstra has seen over the last two years.

"We're not seeing any shift in access lines to support a tipping point argument. We are seeing a higher than before loss in the overall PSTN network and we have quite good internal analysis to explain why that is happening," he said.

Switkowski explained, "there is fixed to mobile migration, there is migration to SMS text messaging particularly amongst young people and there's migration to more widespread use of e-mail as more people get onto both narrow and broadband platforms."

"So I think we can begin to flow that forward and see those trends continue," he added.

According to Switkowski PSTN revenues are falling dramatically all over the world, a process he said "is inevitable".

"Our job is to delay the accelerated fall of PSTN in such a way that as a company we can respond and react to that by making changes elsewhere in the portfolio," he said. "There are the beginnings of the development of a community of households that have no fixed line, but it is very small."

Responding to questions about the long-standing competition notice imposed by the Australian Competition and Consumer Commission over Telstra's allegedly anticompetitive wholesale pricing, Switkowski said he "welcomes a discussion with the ACCC to resolve this amicably".

However, the chief executive officer maintains that Telstra is "firm in its conviction that we've always acted appropriately and within the rules".

"The market has been ignited, we have had no consumer come to us and say 'no we think we should pay more', the growth rate is high and our competitors are benefiting from that," he said. "In fact I see a number of them now feeling so confident as to brag about how successful they are."

"My sense is that this market has worked as well as you would want it to, but of course the ACCC took different view some months ago and it's entirely up to them to bring this process to a close."

According to telecommunications analyst Paul Budde, Telstra could face potential fines of over AU$200 million over the issue.

Switkowski said the telecommunications company continued to have "constructive discussions with the ACCC", but is "unable to offer a view as to how this is all going to come to closure".

"That's a call pretty much the ACCC has to make," he said.