Telecom Asia: How important is the Reach transaction for you?
Phil Mottram: It gives us very good assets to take onboard, and the timing is great because we have strong ambitions around our international business. About a year ago, we started a strategic review of Reach and decided to restructure it and move the majority of the assets over to Telstra International. That deal was completed in on March 1.
What assets are being transferred?
They cover a number of areas, including the transfer of the network assets to Telstra International. In people terms this means more than 300 additional staff. On the network side it gives us additional footprint through undersea cable assets. We also get licenses in new markets such as Korea, Indonesia, the Philippines, Malaysia and Thailand. The growth is now in Asia, so the plan is to leverage existing investments on the region.
Reach also has a strong satellite capability covering over two-thirds of the Earth's surface. This is a good fit for Telstra's Australian customers, such as those in the oil and gas industries. We also are planning to offer this service to the broadcast community as well.
In addition, the voice-trading unit is a kind of a voice minutes termination business on a global basis. We have plans to update and modernize this service with an IP-based platform and angling it to growth markets. This service can address some of the requirements of mobile operators.
How has the need of your customers changed since before the recession, and how has this impacted the assets you obtain and the services you provide?
My feeling is that the market requires more tailored managed services. I think the days of the huge outsourced deals are over. Some large transactions have left customers and suppliers feeling uneasy about those agreements. Some outsourced contracts have not gone well for either party. With that in mind, customers are more educated and thinking through with more detail about what they are buying and who can really deliver it.
With that in mind, we are seeing strong demand for managed services and less for full-blown outsourcing. I think somewhere between the two, we have a reasonable approach when it comes to flexibility around that.