Telstra announces changes to retail store network

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    Thursday 11 February – Telstra today announced its intention to transition to full Telstra
    ownership for its bricks and mortar branded retail stores across Australia.
    Telstra has 67 Telstra owned and operated stores, with another 166 branded stores run by
    independent licensees and a further 104 stores operated by Vita Group Limited.
    The proposal was included in Telstra’s FY21 Half Year results announced today at which CEO
    Andy Penn provided an update on the company’s T22 strategy.
    Group Executive for Consumer and Small Business Michael Ackland said the move was
    required to keep pace with the growing digital economy and give Telstra more flexibility to
    respond to customer needs.
    “This was not an easy decision given that we have enjoyed a long-term partnership with many
    of our licensees,” Mr Ackland said.
    “As more customers interact with businesses online resulting in changes to the broader retail
    industry, we think now is the right time to bring back full ownership to further develop a
    consistent and integrated customer experience across our online channels and store network.
    “At the height of the COVID-19 pandemic we were able to redeploy frontline staff from Telstraowned stores to assist customers through our digital channels or via the phone.
    “It’s this flexibility in how we serve our customers that we’ll be able to unlock with more retail
    branded stores under Telstra ownership.”
    Mr Ackland said the move was also designed to further embed responsible business practices
    through direct employment relationships with store staff, and to have more customer service
    issues resolved in store.
    “Ultimately, we want locals to be getting what they need by visiting their nearest store or
    speaking with a familiar voice over the phone,” he said.
    “We also want our store employees to continue to maintain the high standard of service that as
    a company we expect of them through our responsible business approach.”
    Negotiations with independent licensees about an agreed transition to Telstra ownership will
    begin shortly and that process, which includes plans to offer roles to current store staff in the
    majority of cases as part of agreed transitions, is expected to continue over the next 12 to 18
    months.
    For Vita Group, conversations will begin today about next steps.
    Telstra expects to maintain a large retail presence across Australia while also expanding the
    availability to purchase and access services via its digital channels.
    “We know that in many regional and rural towns, the local Telstra store is a valued part of the
    community providing support to a range of businesses and residents,” Mr Ackland said.
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    “Our regional and rural stores will continue to do this under Telstra ownership as well as
    providing an excellent level of service to local customers.”
    Telstra Business Technology Centres or T-Partner operators are not affected by this change

    courtesy of Bell Direct
    ===================================================================================================

    DYOR

    i hold TLS ( but am looking for a graceful exit )

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    Telstra builds momentum through 1H21 financial results

    • Reported Total Income1 of $12B, EBITDA of $4.1B and NPAT of $1.1B
    • First half Underlying EBITDA of $3.3 billion with second half guidance of $3.3 - 3.6
    billion, with ambition2 for mid-to-high single digit percentage growth in FY22
    • Interim dividend of 8 cents per share and expected FY21 total dividend of 16 cents
    per share3
    • Strong mobile performance, +80,000 retail postpaid handheld services, TMMC +$3
    • T22 cost reduction target increased to $2.7 billion by FY22
    • Revised FY21 guidance4 for Total Income, Underlying EBITDA and Free Cashflow
    Thursday 11 February – Telstra today released its results for the first half of financial year
    2021, showing the business building momentum towards growth in its underlying business.
    The Board resolved to pay a fully-franked interim dividend of 8 cents per share, returning
    approximately $950 million to Telstra’s shareholders. The Board also said it expected to pay a
    fully-franked final dividend of 8 cents per share, bringing the total dividend for FY21 to 16 cents
    per share3
    .
    CEO Andrew Penn said the results showed Telstra’s financial performance was at a turning
    point ahead of an anticipated return to growth in underlying EBITDA.
    “After a decade of disruption following the creation of the nbn, and with its rollout now declared
    complete, we can clearly see the path to underlying growth ahead of us,” Mr Penn said.
    “We responded strongly to the financial headwinds created by the nbn through our T22 strategy.
    This strategy is transforming Telstra while balancing the needs of our customers, our employees
    and our shareholders. We are now less than 18 months from completing T22. We have
    achieved an extraordinary amount and Telstra today is a leaner, more responsive, and more
    agile company than it has ever been.
    “Our investment in innovation and technology, digitisation and networks, improving our customer
    experience and being disciplined in our capital management, mean that at the start of this
    decade, as Australia digitises its economy, Telstra is in a strong position to grow.
    “To ensure our future success, we must recognise this moment for what it is – the time to be
    bold and seize the opportunities we have been patiently building towards. There is a lot of work
    ahead of us, but I remain confident we can achieve our financial ambitions including for
    underlying EBITDA of between $7.5 and $8.5 billion and ROIC of around 8 per cent by FY23,”
    he said.
    On a reported basis Total Income for the half decreased 10.4 per cent versus the prior
    corresponding period to $12.0 billion, while NPAT decreased 2.2 per cent to $1.1 billion.
    Reported EBITDA decreased 14.7 per cent to $4.1 billion. After adjusting for lease accounting
    on a like-for-like basis5
    , EBITDA decreased 11.7 per cent to $4.0 billion.
    Underlying EBITDA decreased 14.2 per cent to $3.3 billion. The largest two contributors to this
    decline were the estimated impact from the in-year nbn headwind6 of $370 million and
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    estimated $170 million impact from COVID-19. Excluding both these, underlying EBITDA was
    broadly flat compared to the first half of FY20.
    Mobile strategy continuing to deliver growth
    Telstra’s strategy continued to deliver increased customer numbers in mobile. During the half,
    Telstra added more than 80,000 postpaid handheld mobile services with healthy performance
    across all segments and brands. It also added more than 46,000 unique prepaid handheld
    users, and more than 163,000 Wholesale mobile services across prepaid, postpaid and IoT
    services.
    Mobile revenue declined due to lower hardware sales and the impact on international roaming
    from COVID-19.
    Postpaid handheld TMMC, a leading indicator of ARPU, increased by approximately $3 during
    the half, building momentum towards ARPU returning to growth in the second half of FY21
    compared to the prior corresponding period.
    Reported postpaid handheld ARPU declined 8.6 per cent for the half, or approximately 3 per
    cent if the impacts to international roaming are removed. This decline was all due to noneconomic accounting impacts, out-of-bundle declines and Belong dilution, with impacts from
    recent pricing changes now positive. This gave Telstra strong confidence in the outlook for
    mobile ARPU, as it expected pricing impacts to continue to strengthen in 2H21.
    “The financial performance of our mobile business has reached an exciting turning point with
    EBITDA growing sequentially in 1H21. Our investment in world-leading 5G means we are able
    to offer our customers a combination of speed, capacity and coverage that is far superior to our
    competitors. We remain confident that mobile EBITDA will continue growing sequentially in
    2H21 and return to full-year growth this financial year,” Mr Penn said.
    Telstra continued to extend its 5G leadership, with its network expanding to cover more than 50
    per cent of the Australian population and delivering coverage to more than 100 cities and towns
    across the country. One million 5G mobile devices are now connected to Telstra’s network. The
    company also achieved a world-first with a download speed of greater than 5Gbps on a
    commercial network using mmWave spectrum.
    In Fixed – Consumer & Small Business, Telstra focussed on improving long-term economics
    and customer experience. Bundles and data revenue declined 0.6 per cent with ARPU
    stabilising as customers were moved to in-market plans. Telstra said it would focus on
    increasing ARPU through differentiation, add-ons and improved plan mix including a higher
    proportion of customers on 100Mbps+ plans.
    In Fixed – Enterprise, revenue declined 6.4 per cent as Telstra transitioned from providing
    virtual private corporate networks to integrating over-the-Internet technologies such as SDWAN
    with Telstra Fibre and NBN access. NAS income declined 6 per cent.
    Fixed - Wholesale results also showed continued declines in legacy products including from nbn
    headwinds, and commercial works declines. The ongoing portfolio including passive
    infrastructure grew.
    Following through on T22
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    Mr Penn said progress against the T22 strategy remained on track but Telstra remained
    focussed on the work still to be done.
    “More than 80 per cent of milestones are now delivered or on track to be delivered. Our
    discipline in delivering T22 has brought enormous change for Telstra which is supporting the
    turnaround of the company. Having said that, the hardest part of any transformation is often
    seeing it through to the end and we have more to do in customer experience in particular,” Mr
    Penn said.
    “I am confident the many initiatives we have taken under our T22 program, particularly in
    simplifying the business and the digitisation program, will further improve customer experience.
    But I know not all aspects of our customer experience are where we need them to be and we
    have more work to do. One of our focus areas for 2021 is the culmination of the digitisation
    program rolling out in mass market.
    “To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set
    an aspiration7 for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5
    billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused.”
    During the half, Consumer & Small Business digital sales increased to account for 40 per cent of
    Telstra’s transactions, while more than 70 per cent of service interactions were also handled
    digitally. Telstra Enterprise reduced the number of active products by 45 per cent compared to
    FY18 and launched Adaptive Mobility to give customers more flexibility.
    Telstra continued to make progress on its productivity target, reducing underlying fixed costs by
    a further $201 million, or 7 per cent, during the half and increased its productivity targets to $450
    million in FY21 and from $2.5 billion to $2.7 billion by the end of FY22. Around $2.0 billion has
    already been delivered under the program.
    Telstra exceeded its target of monetising up to $2 billion worth of assets to strengthen its
    balance sheet, with transactions including the sale of Velocity and South Brisbane Exchange
    FTTP networks, and the sale-and-lease back of the Pitt Street Exchange property.
    Telstra also amended one of the principles within its capital management framework, with the
    principle regarding targeted capex to sales ratios updated from “Target capex/sales ratio of
    ~14% excluding spectrum from FY20” to “Target capex/sales ratio of ~12% excluding spectrum
    from FY23.”
    Progress on legal restructure
    Telstra today also provided an update on the establishment and proposed monetisation of
    InfraCo Towers, as well as the broader legal restructuring of the organisation announced in
    November 2020.
    Mr Penn said Telstra had significantly progressed the establishment of InfraCo Towers as a
    separate operating business, with significant work due to be completed by the end of FY21 as
    previously indicated.
    “We plan to commence the process for external strategic investment into InfraCo Towers early
    in the first quarter of FY22, with binding offers to be submitted by the second quarter of FY22.
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    “We are undertaking significant verification and due diligence on our towers and property,
    appointed key members of the management team and advisors, and preparation work is well
    advanced to meet our timetable.
    “Significant progress has also been made towards finalising the inter-company agreements
    between ServeCo and InfraCo Towers, the redesign of processes, and implementation of new
    tower asset management systems,” Mr Penn said.
    Mr Penn said the proposed legal restructure of the Telstra group of companies into three
    separate entities – InfraCo Fixed, InfraCo Towers and ServeCo – to drive greater transparency,
    increase focus across our operating businesses, create a platform for growth and innovation,
    and enable long-term valuation realisation from our infrastructure businesses, was well
    underway.
    “Since we updated the market in November 2020, we have appointed external advisors and
    progressed consultations with stakeholders to obtain approvals and support for the restructure.
    “This includes discussions with the ACCC, the ACMA and relevant Government Departments to
    ensure that Telstra’s regulatory obligations will continue to apply as intended. We have also had
    constructive engagement with NBN Co on the restructure.
    “We will continue to work very closely with our partners, our people and stakeholders throughout
    this process as we navigate the range of existing commercial, regulatory, and operational
    requirements,” Mr Penn said.
    The Group restructure is expected to be completed by the end of calendar year 2021, subject to
    any requisite approvals, and a further progress update will be provided in March 2021.
    Updating Telstra’s retail approach
    Telstra today also announced its intention to transition to full ownership for all of its branded
    retail stores across Australia. The move will enable Telstra to keep pace with the growing digital
    economy and to provide greater flexibility to respond consistently to customer needs.
    Currently, Telstra has more than 60 Telstra-owned and operated stores, with another 166
    branded stores run by individual licensees and a further 104 stores operated by Vita Group
    Limited.
    Vita Group and individual licensees are being notified of the plan with discussions and transition
    arrangements expected to progress over the coming months.
    The year ahead
    Telstra has also today issued revised financial guidance for several aspects of FY21 that were
    first announced at Telstra’s FY20 results briefing on 13 August 2020.
    The range for Total Income was adjusted from $23.2 billion - $25.1 billion to $22.6 billion - $23.2
    billion, a $1.2 billion reduction at the mid-point from prior guidance. The large majority of the
    change was due to low-margin hardware and other equipment sales.
    Telstra also provided guidance for second half Underlying EBITDA in the range of $3.3 billion -
    $3.6 billion, compared to $3.3 billion in the first half. Flowing this to the full year means the range
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    for Underlying EBITDA was narrowed from $6.5 billion to $7 billion to be $6.6 billion to $6.9
    billion.
    The Underlying EBITDA guidance assumes an in-year nbn headwind of approximately $700
    million.
    The estimated COVID-19 impact in FY21 was unchanged at approximately $400 million.
    The guidance range for Free cashflow after operating lease payments8 was increased from $2.8
    billion - $3.3 billion to $3.3 billion - $3.7 billion, up $450 million at the mid-point, due to working
    capital management and the impact of lower hardware revenue.
    Telstra expects to be at the low-end of the net nbn one-offs range due to factors including NBN
    Co’s decision to pause HFC-based connections of new customers.
    Guidance for Capex remains unchanged from the disclosures made at Telstra’s FY20 results
    briefing on 13 August 2020.
    -ends

    courtesy of Bell Direct
    ===================================================================================================

    DYOR

    i hold TLS ( but am looking for a graceful exit )

    1 like
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    Telstra profit down as mobile sales slip

    https://thebull.com.au/telstra-profit-down-as-mobile-sales-slip/

    DYOR

    i hold TLS ( but am looking for a graceful exit )

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