Revealed: How Telstra will spend $3 billion upgrade budget

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Revealed: How Telstra will spend $3 billion upgrade budget

Telstra has revealed how it will spend up to $3 billion on upgrading its network and improving customer service over the next three years.

The investment program was prompted by a slew of highly publicised network outages that plagued Telstra throughout 2016.

During Telstra's investor day conference, chief executive Andrew Penn outlined the three investment areas: network building, digitisation and customer experience

Building networks

Telstra has put aside more than $1.5 billion in building new networks. This includes building a 100 percent software defined network by FY20, taking leadership in the 5G market, supporting the transition to NBN and evolving network resilience to deliver scale and reliability for future network growth.

"We are faced with unprecedented demand on our network and a world of opportunity to deliver new experiences," Penn said.

"Network traffic over our fixed and mobile networks will grow five times over the next five years and the capacity to support this level of traffic growth is not yet built. We will leverage new technology to deliver higher availability and performance and unlock new sources of differentiation for our customers."

Penn outlined his objectives for network investment:

  • Building a new network based 100 percent on SDN/NFV architecture by FY20.
  • Deliver double the speeds of standard 4G to 87 percent of the population by the end of FY19.
  • Deliver peak network mobile speeds of up to 1Gbps in core CBD locations and high traffic areas by the end of FY19.
  • Ensure 85 percent of ADSL customers experience quality video streaming during the NBN transition.
  • Deliver five times data growth holding overall network costs flat by FY20.

Digitisation

Telstra will spend approximately $1 billion in accelerating the digitisation of its business. Penn said customers increasingly expected to transact with Telstra digitally and for that to happen, the company must transform its own IT environment.

"Our goal is a common architecture for our systems providing a holistic and consolidated view of our customers and how we serve them, and best meet their needs," he said.

Specific goals for digitisation include:

  • 50 percent of applications retired, contained or moved to the cloud by FY20 – currently 17 percent.
  • Delivery of Agile/DevOps capabilities increased from 20 percent to 70 percent by FY20.
  • Straight processing of consumer NBN orders to 95 percent by FY20 – currently less than five percent.
  • 70 percent of customer service transactions conducted from digital channels – currently 58 percent.

Customer experience

Telstra has allocated up to $500 million in improving customer experience. Penn said that digitisation of the business would underpin improvements to customer experience.

"We have a comprehensive cross-company customer experience improvement plan underway. This includes initiatives which are aimed at delivering seamless, simple and integrated interactions for customers and eliminating key pain points."

Specific examples include:

  • Improving efficiency and ease for customers to engage with Telstra sales and services.
  • Focusing on Telstra's product proposition, shifting to customer experience-led product design.
  • Managing the customer life cycle with a greater emphasis on growth from Telstra's existing customers.

Telstra has also set the goal of improving its strategic net promoter score by three to six points per annum.

Penn also said that the company would review its capital allocation strategy over the next 6-12 months, focusing on long-term capex investments after the NBN is completed.

Telstra expects to see in excess of $500 million per annum in earnings benefits by 2021 as a result of the $3 billion investment.

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