An explosion of mobile devices coming from the rise of the Internet of Things could yield massive revenue opportunities for Telstra in the next 12 to 18 months, according to Telstra CEO David Thodey.
At a media conference for Telstra’s 2013/14 financial year results, Thodey admitted that revenue from mobile has softened due to market saturation—most Australians own a mobile device, if not more than one. However, the CEO said there will soon be many more things to connect.
Thodey listed several opportunities, including connected digital cameras, cars with SIM cards, and a rapidly increasing number of screens and connected machines in the home. He added that tablets are increasingly replacing PCs, he said.
“Suddenly your addressable market is enormous,” he said. “They don’t have the revenues per month that you would get from a person using a smartphone. It may be two, three, four [or] five dollars a month. But it is still a tremendous opportunity.”
Mobile network investment
Telstra plans to this year invest an additional $1 billion in the mobile network, which Thodey said is the telco’s central advantage over competitors Optus and Vodafone.
“What’s so important here is that we maintain our leadership,” he said. “The 4G network must maintain its geographical supremacy.”
That is in addition to the $100 million investment in a nationwide public Wi-Fi network, announced by Telstra earlier this year. Under that plan, Telstra plans to set up 1000 hotspots in metro and holiday areas of the country by Christmas, Thodey said.
"We believe networks make a difference and we're going to continue to invest in network leadership both here in Australia and internationally,” he said.
Thodey said he’s not worried about competitors catching up.
“There’s a degree of increasing competitiveness in the market,” he said. “It’s nothing that I haven’t seen over the last 10 years.”
Data sharing plans at Telstra did not take off as fast as expected, said Thodey. But he said the telco is tweaking them and is upbeat they will succeed in the long term.
While Vodafone in particular has been targeting roaming as a competitive advantage, Thodey said there will be no major change to Telstra’s roaming strategy. The telco will continue to watch all facets of mobile pricing and adjust as needed, he said.
“We will continue to be competitive,” he said. “As the market moves, we’ll move with it.”
NBN, data retention talks
It remains unknown when the contract renegotiation with NBN Co will wrap.
“We share the government’s goal to finalise the agreements as soon as possible, but no date has been set,” said Thodey, describing the talks as “progressing well.”
“The current agreements are complex. Therefore, the shift to a multi-technology model requires careful consideration as to how these agreements need to be modified. The teams are working to get the material commercial issues resolved.”
Telstra and NBN Co have agreed to a non-binding commercial framework and are now working out the details, he said.
The telco seeks to maintain the value of the current agreements, and this is reflected in the non-binding agreement, he said. “In these renegotiations, our objective is that we must be kept whole.”
On mandatory data retention, Thodey confirmed that the telco is in discussions with the government and said he has no major concerns so far.
“We hold a lot of data. We’ve got to get some clarity around exactly what changes the government is asking for.”
“On the early discussions, we don’t see it as a significant issue for Telstra.”