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2014-02-14

DavidThodey003

Telstra results pose questions for the future.

Telstra has posted strong half yearly results, with profits growing by nearly 10% over the last 12 months.

In particular, the company continues to outperform its rivals in the mobiles market.

But as Telstra looks increasingly to Asia as a field of operations, the outlook for its employees is less certain.

Telstra has announced a profit of $2 billion for the first half of this financial year, with results driven by steady growth in mobile and fixed broadband revenues and by the expansion of its Network Assisted Services (NAS) and International businesses.

At a time when its major competitors are struggling to retain mobile customers, Telstra added 739,000 new domestic retail services to its customer base.  By the end of 2013, Telstra had 15.8 million mobile customers, an increase of nearly 10% since the previous year. Some 4.1 million were on 4G.

Optus, in comparison has just announced a decline of 64,000 services over the December 2013 quarter while Vodafone continues to struggle to stem the losses it has suffered over the last two to three years.

Vodafone had 7.5 million mobile subscribers in 2010, but the figure had dropped to 5 million by November 2013. Some positive growth occurred in December.

Telstra’s mobile base is now larger than Optus and Vodafone’s combined. Significantly, the recent growth was not achieved at the expense of margins which increased by 2% over the reporting period.

These results are a strong vindication of the aggressive mobiles strategy adopted during the Trujillo years which saw the rapid roll-out of the Telstra 3G network.  The continuation of that strategy under Thodey has seen Telstra extend the reach of its 4G network to cover 85% of the population by December last year.

Telstra now claims to have 4 times the 4G coverage of any other company in Australia.

The Asian century: what does it mean for jobs?

But although the domestic market is strong, Telstra has made it clear that increasingly it sees a large part of its business future in Asia.

While the reported 29.3% increase in Network Assisted Services (NAS) revenues largely reflects Telstra’s success in winning federal government contracts, Thodey’s eyes are on regional opportunities for NAS services in the future. The new data centre in Singapore and the planned joint venture with Telkom Indonesia are part of this strategy.

So what does such a strategy mean for Telstra employees?

To date, Telstra’s regional adventures have met with mixed success. But they have themselves had relatively little impact on domestic employment levels and conditions. These have been driven more by the dynamics of the local market.

The question is whether the company is now entering into a distinctly new phase.

An ever-increasing number of functions, including core network management roles, are being off-shored into Asia. At the same time at least some direct employment by Telstra in the region is being created.

If these trends continue, the Telstra workforce of the future may be more dispersed and fragmented – and provide fewer local opportunities for highly skilled workers – than has historically been the case.

At a time when mining is slowing down and manufacturing in Australia is on its knees, it is of critical importance that our domestic Information and Communications Technology (ICT) sector grows strongly. Telstra has a key role to play in driving Australia’s transition to a more innovative and knowledge-based economy, including through support for skilled jobs here.

It is time for a public discussion about how it might do so.

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