4 Key pillars
1. Simplify offerings
- consumer & SME plans from 1800 to core 20
- all-digital experience (complete migration consumer & 50% of business by 210630
- to reduce customer service calls by 33% in 2 years and 67% by 21/22
2. Stand-alone infra business
- establish Telstra InfraCo from 180701, potential demerger when nbn complete or entry of strategic investor; contains fixed, datacenters, fibre, copper, HFC, international subsea cables, exchanges, poles, ducts & pipes; no mobile assets
- customers: Telstra, nbn, other wholesale
- 3k employees
- assets AUD 11b
- rev AUD 5.5b, EBITDA AUD 3.3b
3. Simplify structure
- new operating model & organisational structure TBA July 2018
- to reduce 2-4 management layers
- to establish Telstra Global Business Services (point of consolidation for all large scale back-of-house processes and functions)
- to invest in 1500 new roles, Transition Program for 8k job cuts & training program for those who stay (together funded with AUD 50m)
4. Cost reduction program & portfolio management
- plans asset sales AUD 2b by YE 19/20
- to increase cost savings by AUD 1b to 2.5b by YE 21/22
- underlying core fixed costs from AUD 7b in 16/17 to AUD 4.5b by YE 21/22
5G
- Plans SDN & 5G, network ready 18/19H1, high-demand areas ready YE 19/20
Guidance
- transistion from current program to reduce revenues AUD 500m over 3 years; incremental benefits from previous investment program AUD 500m
- target capex/rev 16-18% in 18/19, 14% in medium term
- expects fixed & mobile market decline 2-3% in 18/19
- guidance 18/19 (AUD): rev 26.6-28.5b, EBITDA 8.7-9.4b (before restructuring cost 600m), one-off from nbn agreement 1.8-1.9b, capex 3.9-4.4b
- ordinary dividend pay-out ratio 70-90% of underlying earnings, special dividend from nbn 75% of net receipts; dividend 17/18 22c
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