Wednesday, June 20, 2018

Telstra Investor Day: Telstra2022 Plan

Highlights from Telstra's Telstra2022 plan:

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


  • Plans SDN & 5G, network ready 18/19H1, high-demand areas ready YE 19/20


  • 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