Under a new CEO, Telstra primes for transformation

Camille Mendler/Ovum
06 Oct 2015

Energized with a new CEO, Australia’s Telstra continues to assert itself as a global enterprise service provider.

Both global and national acquisitions are boosting its ICT skills and physical assets. Telstra’s new leader, Andy Penn, is willing to rip up traditional telco strategy, seeking growth in cloud and IoT services, using a range of partners.

Ultimately, timing is all: As multinational spending devolves regionally, Telstra may well prove a refreshing alternative.

On paper, Penn has the experience to make Telstra a world-class service provider. Australia is often called the “Lucky Country,” and from a digital transformation perspective, the nickname is well deserved.

With former communications minister Malcolm Turnbull now leading the government, Australia can claim the world’s most digital-savvy prime minister. This fact is likely to draw even more attention to Australia as a technology trendsetter and therefore to Telstra and its ambitious new leader.

Andy Penn became CEO in May 2015 and spoke at Telstra’s Vantage event in Melbourne in late September. To a mixed crowd of Telstra customers, partners, company executives, and industry analysts, Penn revealed how he wanted to develop Telstra’s world-class assets to make it a true world-class service provider operating on a global level.

Penn has several years of running multinational organizations under his belt and should have the right experience to see this ambition through. He’s already outlined a strategy focusing on revenue growth versus margin defense – something that many telecoms CEOs lack the courage to execute.

He said he’s willing to work more proactively with partners to get the job done, highlighting the importance of innovative startups, particularly in the burgeoning Internet of Things.

Telstra can call its technology infrastructure “world class,” but other facets of its operations, including customer service, need work. Telstra’s push into Asia is new and untested: Its acquisition of Pacnet, Asia’s largest private owner of submarine cables, only closed in April 2015.

But the Singapore and Hong Kong-based service provider should boost Telstra’s international credibility and market visibility. As well as its extended network and data center assets, Pacnet brings an 800-strong team to support multinational customers.

It also possesses expertise in network functions virtualization and software-defined networking, complementing Telstra’s own expertise in these areas. Moreover, Pacnet comes with 1,000 live enterprise accounts – some of which Telstra previously tried to capture.

Several Telstra enterprise customers that Ovum has interviewed believe that Telstra is improving its ability to cater for complex ICT needs, both nationally and internationally. Key investment areas are in consultative selling, integration skills, managed security, and cloud services (the latter a strategy introduced four years ago). The fact that many of Telstra’s original cloud customers are looking to extend their relationship beyond Australia to China, North America, and Europe is a strong sign of trust.

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