Telstra is reaping the benefits of its strategy of defending its established businesses and growing new ones in broadband and mobile data.
The Australian incumbent is gaining broadband market share, and broadband revenue growth is more than compensating for the loss of PSTN revenue. This is made easier because the loss of PSTN revenue has been staunched by better, more targeted offers and segmented marketing. Telstra is even gaining retail PSTN customers. It is generating impressive growth in mobile data as well, as new 3G services begin to realize their promise.
This market performance is impressive, even by global standards.
Today's results prove that Telstra has successfully slowed the decline in traditional telephony revenues. It is even taking retail PSTN customers away from its competitors. PSTN revenue for the second half of the year declined only 2.5% compared to the first half - a strong result by any standard. This translated to a loss of revenue of $ 309 million for the full year.
Broadband growth was similarly impressive. Telstra gained retail market share, as retail customer growth of 59.8% outstripped wholesale growth at 23.5%. This translated to a revenue gain of $508 million for the full year, easily compensating for the PSTN decline.
These results also put the Australian broadband market into perspective. The much-vaunted ULL threat has been slow to materialize. Only 239,000 ULL services were in operation in June 2007, compared to Telstra's broadband retail base of 2.4 million. Telstra's competition is still heavily dependent on Telstra wholesale broadband.
Mobile service revenue growth was 9.8% for FY07, just over double last years' growth. The growth is being generated in new mobile data services such as wireless broadband, Foxtel by Mobile, MMS and video calling. Telstra now has 533,000 wireless broadband customers, of which 300,000 are data card users with ARPUs in excess of $100/month.
Telstra also crossed the 2 million 3G subscriber mark (1 million of which are Next G) to take a clear lead in the Australia 3G market. The good news is these 3G customers continue to outspend their 2G equivalents by around $20 per month.
Decline in mobile access
Among the warning signs however was the slight decline in mobile access and voice revenue. This is one area in which Telstra's competitors continue to outperform it. Telstra also has 1.2 million CDMA subscribers on its customer base who have yet to migrate to the Next G platform. The run rate of 100,000 Next G additions per month will need to more than double for Telstra to reach its targets.