Telstra says its half-owned subsidiary Foxtel is free to sell telephone and broadband services alongside pay TV if it helps the business build subscriber numbers.
Telstra chief executive David Thodey said Foxtel was “a very important part of our strategy” in the future and he was untroubled by the pay TV company bundling up a “triple play” package, which could be offered over the National Broadband Network (NBN).
“There’s nothing in the relationship between Telstra and Foxtel that prevents them from reselling telecommunications services,” Mr Thodey said.
“We need to see Foxtel’s market penetration increase and we are going to help Foxtel do that through to about a 50 per cent market penetration,” he said.
Mr Thodey, speaking at Telstra’s Investor Day briefing in Melbourne, said strategic decisions the company makes in the next two years will determine its future in a dramatically changed telecommunications market.
“If you look back in eight to nine years, it will be more about the decisions we make in the next two years about the future of the company which will really determine the success of this period,” he said.
Unprecedented growth in demand for digital content, and accompanying demands on storage and transmission, are “game changers in terms of what companies like Telstra need to do”.
“We are seeing the demand for more integrated services,” Mr Thodey said.
“Consumers don’t care whether they are on wi-fi, on a mobile network or a fixed network.”
Understanding the growth in demand for a seamless data and communications experience was important for Telstra’s future.
The Telstra boss said demand growth remained strong across all forms of communication, even in voice, where mobile voice calls were growing as fixed-line calls declined.
However the challenge, Mr Thodey said, was getting pricing right on new offerings as services shift from voice-focused to data-based.
“That is probably the holy grail for every telco around the world,” he said.
Mr Thodey reiterated Telstra’s focus on growing mobile market share, with $500 million out of a $1.2 billion capital expenditure budget for 2012/13 earmarked for mobile and National Broadband Network (NBN) growth.
Telstra’s executive director, mobiles, Warwick Bray, said there were currently 6,400 active fibre services connected on the NBN.
Mr Bray said average revenue per user (ARPU) in the key post-paid handheld market was flat year on year, due to competitive price cuts over the past two years.
Mr Bray said the effects of those “price declines” were starting to fade as Telstra increased its prices on mobile phone plans in 2012.
Mr Thodey declined to say how many of those 6,400 connections Telstra had, saying market share was “secondary” at this stage to developing the right marketing strategy.
Telstra reaffirmed it expects low single-digit earnings and income growth this financial year and will pay a 28 cent, fully franked dividend.
Telstra moved from third to first place among Australia’s providers in prepaid services.
Mr Bray said prepaid was profitable for Telstra but that there was an increasing shift to postpaid services, possibly driven by customer demand for smartphones available on those account types.
