Telstra (ASX:TLS) has acknowledged that data, rather than voice, is now its “core business".
Read more on Telstra’s 2010 AGM,
The acknowledgement, made by Telstra chairman, Catherine Livingstone, at the telco’s 2010 annual general meeting, follows a continuation of the decline in the company’s public switched telephone network (PSTN) revenue.
“The reason for this industry transition is simple: people are moving away from the fixed telephone and instead communicating via mobiles, the mobile internet and social media,” Livingstone said.
According to Livingstone, Telstra’a PSTN revenues had since 2005 fallen from $7.7 billion to $5.8 billion annually, while its mobile voice revenues had increased from $4.7 billion to $7.3 billion.
Mobile voice now exceeded PSTN revenue due to “an explosion” in the use of mobile devices for everything from text messages to social media to Web browsing.
“What this demonstrates is that the voice-led business model is being superseded by the new data-led business model, driven by phenomena such as smart phones,” she said.
According to Livingstone, data traffic on Telstra’s mobile networks had doubled each year, proving a challenge for the telco as it had not yet created the business model to monetise this demand.
However, Livingstone claimed Telstra was “well placed” to make the transition due to its widely publicised IT transformation program during the past five years.
“While part of our industry transition strategy is self-funding – that is, we will save on operating costs, which will pay for the simplification and service initiatives – the investment in market position and market products is a cost in the current year,” she said.
“However, it is a cost which will underpin the performance of the business in future years, and as a Board, we must have regard to the long term interests of shareholders.”