Telstra is investing $3 billion in its networks over the next three years as it attempts to win back the faith of disgruntled customers hit by a series of network outages over recent months.
The announcement comes as Australia’s dominant telco released its full-year financial results on Thursday, reporting full-year profits of $5.8 billion, an increase of 36.6% from the previous corresponding period.
Telstra’s revenue jumped by 1.5% to $25.9 billion and the company announced it would initiate a $1.5 billion buyback from shareholders, through a $1.25 billion off-market share buyback and a $250 million on-market share buyback.
The buyback will be funded from surplus cash and accumulated profits, including from the $1.8 billion sale of Chinese online car sales business, Autohome, earlier this year.
{loadposition peter}On the investment in its network after a disastrous run of outages, chief executive Andy Penn said that while Telstra performed well and added new customers, he acknowledged it had not made enough progress on improving customer experiences.
Penn said Telstra’s customers and networks were its biggest assets.
“We must invest to set new standards and deliver excellent experiences for our customers.
"We need to retire old technology and systems that slow down and complicate how customers are served."
Penn acknowledged that work still needs to be done to improve systems and processes that can cause customer frustration and delay, “and to ensure that we consistently deliver a great service experience”.
“We know that customers expect more from us as their reliance on smart devices continues to grow. This is why improving the customer experience is paramount, and why network interruptions in the second half were particularly disappointing.
"As a result of these factors our overall NPS (net promoter score) score decreased by four points year-on-year, although we improved advocacy with enterprise, government, wholesale and managed business customers. We continue to simplify the business and recognise the things which can frustrate customers about our products and service are often the same things adding cost to our business," he said.
Network outages aside, Penn said Telstra had performed well and added new customers across its key products.
He said the results for the full year had been influenced by increasing competition, the changing product mix of earnings and acceleration in the rollout of the NBN network.
“There is no doubt that competitive intensity has increased across our segments and products,” Penn noted.
“The rollout of NBN has progressed and the pace of technology innovation has continued to accelerate. This highlights the importance of our vision to become a world class technology company and our continued efforts to improve customer advocacy, drive value and growth from our core businesses and build new growth businesses.”
While Telstra’s reputation and customer loyalty were severely tested by the constant network outages, the big telco maintained its dominance in the mobile market.
Its total retail mobile subscriber base increased to 17.2 million, up from 16.7 million a year ago, and up from 16.9 million in the first half.
Telstra said, however, that fixed revenue fell, largely due to continued decline in the number of fixed voice services and impact of regulatory changes.
“The rate of fixed voice revenue decline was broadly maintained due to successful retention activities such as bundles. The number of customers on bundled plans increased by 322,000 to 83% of the retail fixed data customer base,” the company said.
Telstra also said fixed data partially offset the decline in voice, with domestic retail subscriber numbers increasing by 235,000, “the highest net adds in more than five years, bringing the customer total to 3.4 million”.
And, demand for NBN services through Telstra continued, with connections growing by 289,000 to 500,000.
Telstra is investing $250 million from its existing capital programme over the next six to 12 months to provide what it says is a “higher degree of network resilience and improved network performance” in the mobile and ADSL broadband networks.
“We are investing so our network performance exceeds our customers’ expectations and we continue to plan for the network of the future, where our customers will be even more connected with more devices and services taking advantage of what our networks will offer,” Penn said.