Telstra Corp, Australia’s largest telephone company, may consider acquisitions to bolster growth after reaching agreement with the government’s NBN Co on the closure of its copper-wire network.
Acquisitions may include companies with experience in so-called cloud computing, chief executive officer David Thodey said in an Australian Broadcasting Corp interview televised yesterday. Cloud computing lets users access data and services on external servers.
Telstra agreed on June 20 to surrender its copper-wire network and shift customers to the NBN fiber platform that will be built during the next eight years, meeting government demands it separate its fixed-line assets from the units that sell to customers.
The Melbourne-based company will receive about A$11 billion (US$9.5 billion) in compensation for the move, which also avoids penalties including a ban on acquiring new airwaves for next-generation mobile services.
“We’ll keep expanding our product portfolio out, but there are new opportunities coming along that may provide opportunities for us to do acquisitions,” Thodey said. “It’ll be more about acquiring capability than sort of bolt-ons.”
The non-binding NBN agreement announced last week still needs to be approved by Telstra’s 1.4 million shareholders and regulators, with Thodey expecting to have a more detailed proposal by the time of its annual investor meeting in November.
The agreement, which may cost as much as A$43 billion to build, gives the fiber company access to the trenches and ducts that house the copper wires.
Thodey expects to lose market share in Australian fixed-line services, which currently sits at about 76 percent as a result of Telstra owning the only existing national network.
“As people migrate off copper to fiber it will be a very competitive world and we probably wouldn’t hold 76 percent,” he said.
Closing the copper-wire network will cause “cultural change” at Telstra as more of its earnings come from retail services, Thodey said.
He plans to increase spending on sales and marketing to win customers for phone, Internet and mobile services.
“We’ve got to re-orientate it to the customers, we’ve got to find ways to delight customers and that’s what we are going to focus on,” Thodey said. “I don’t underestimate this, it will probably take another three, four, five years, but it’s another stage for the company.”
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