Turnaround story

05 May 2008

Best Asian Telecom Carrier
Winner:Telstra Corp
Last year's winner: SK Telecom

Best Asian Mobile Carrier
Winner:Telstra Corp
Last year's winner: SK Telecom

Business scope: Full-service carrier - local, long-distance voice, DSL, mobile, directories, online media, wholesale, managed enterprise services

Financial: Revenue (1H 2007-08): A$12.4b ($11.7b), up 6.2%. Net profit: A$1.9b ($1.8b), up 13%

At a time when growth is hard to come by, Australia's market Telstra has defied the expectations, rebounding in the mobile market and actually increasing its traditional voice subs.

The centerpiece of its turnaround is NextG - a W-CDMA/HSDPA network in the 850-MHz spectrum. Telstra and partner Ericsson built the network across Australia's vast expanses in just ten months - one of the great telecom engineering achievements of the past ten years.

They installed 6,000 base stations with cell sizes of up to 200 km - critical in such a sparsely-populated country.

Three years ago the story was different. As Mike Wright, executive director, Telstra wireless, explains, 'Our wireless business was in decline. We were not differentiated. Our cost structure was high. We were operating multiple networks, weighing down the bottom line and depleting capital.'

In a review led by CEO Sol Trujillo, Telstra examined its technology options, including the then rising wireless system Flarion, and Wimax.

The 850-MHz caught their attention because, says Wright, 'it would give us the ability to build a single network and to deliver 3G to the entire footprint.'

The problem with the higher 2100-MHz frequency was that users could not get 3G services all of the time. But the 850 option meant customers could move to 3G with confidence.

In the 18 months since launch, customers have voted with their feet: 38% of Telstra's mobile users are now on 3G. ARPU has risen by A$20 and data revenue has exceeded SMS.

The tricky part was going to be handsets. But the launch by Cingular (now AT&T Wireless) of the world's first 850-MHz 3G network at the time reinforced their confidence; support of one of the world's big cellcos meant that handset vendors could achieve some kind of scale.

Since Telstra's decision, Canadian cellco Rogers had also adopted 850 MHz, while there's a good deal of interest in Latin America.

Telstra mobile customers have the choice of more than 40 handsets and the carrier is 'paying less for the 850-MHz devices than for the 2100,' said Wright.

Wright's team also simplified the UI on the handset, introducing one-touch commands and new mobile TV, location and other apps. Since late last year consumers have been enjoying full internet access.

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