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Telstra reinvests AU$1.2bn in network

Telstra plans to invest AU$1.2 billion back into its mobile network, as the company today reported a full-year profit of AU$3.4 billion on the back of adding 1.6 million mobile customers in the last year.
Written by Josh Taylor, Contributor

Telstra has today announced plans to invest AU$1.2 billion back into its mobile and transit network, as the company reported a full-year profit for AU$3.4 billion to 30 June 2012, up 5.4 per cent from last year's reporting.

Telstra CEO David Thodey (Screenshot by Josh Taylor/ZDNet)

The company plans to invest an extra AU$1.2 billion into its mobile network this year, as well as in the transit network. Telstra said that this investment will maintain the company's network advantage and allow Telstra to accelerate the benefits from the roll-out of the National Broadband Network (NBN).

Telstra announced that it had added 1.6 million new mobile customers in the last year, bringing Telstra's total mobile customer base to 13.8 million. This figure includes 6.6 million post-paid customers, 3.3 million prepaid customers and 3.1 million mobile broadband customers.

Telstra CEO David Thodey said that Telstra's network was key to keeping customers and growing that customer base.

"The quality of our mobile network is really helping to drive this growth. If you look right across the world, the network is a key differentiator."

Revenues for mobile were up 8.5 per cent, to AU$8.7 billion.

Telstra added 203,000 new fixed line broadband customers, to bring it to 2.6 million in total, although its PTSN customer base declined by 281,000.

In its first year of offering Long Term Evolution (LTE) or "4G" services, Telstra had 375,000 active services, comprising of 113,000 of Samsung or HTC handsets and 262,000 USB dongle or Wi-Fi hotspot devices. The network now covers 40 per cent of the population of Australia.

Thodey said that the operation of this network costs 50 per cent less than it does to operate the 3G network, but would not go into too much detail about the kind of revenue LTE was pulling in for the company. He said that early adopters tend to pull in a higher average revenue per user (ARPU) than normal, and the company would wait until there were 1 million LTE subscriptions before reporting in more detail.

While mobile was a boon for Telstra, Sensis continued to decline sharply, with revenue down 17.7 per cent to AU$1.5 billion. Thodey said of the results that it "is what it is", and the company was through year one of a three-year transition for Sensis that would see two more years of double-digit decline before improving.

Thodey said that Telstra has now shifted the way it deals with customers, implementing a new Net Promoter Score method of assessing customer interactions. As a result, there had been a 26 per cent decline in level 1 complaints to the Telecommunications Industry Ombudsman in the last financial year.

"We ask every Telstra employee to treat customers the way they would want to be treated," he said, adding that for a company with Telstra's customer base, was a mandate to have.

Telstra's simplification program Project New delivered AU$1.1 billion in productivity benefits in 2011-2012, Thodey said, but was still only 30 per cent completed. Labour costs were down 1.8 per cent from AU$4.95 billion to AU$4.86 billion. Thodey said this was a strong result, given that the company was dedicated to improving customer service.

"To drive a 1.8 per cent decline in our labour costs while demand is growing and we're trying to improve customer satisfaction is, truly, a strong result. This is difficult to do because volumes are up and you've got to do things differently if you're trying to improve productivity."

Telstra expects to have free cash flow of between AU$2 billion and AU$3 billion over the next three years, including the incoming cash from the deal with NBN Co to lease pits and ducts, and to transition customers over the NBN. Despite the new NBN corporate plan released yesterday, Telstra said the expected free cash figure would not change.

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