Telstra has announced a restructuring, declaring itself a global carrier ready in particular to tackle the Asian market opportunity, especially in the cloud and managed services space. At its recent analyst relations day, Telstra said it was creating a global business for the first time. Now, when it builds a new product, it is not building a service just for Australia but one that is scalable for the global market.
To achieve its goal, Telstra will need to start thinking with a global mindset. But it will also have to be a realistic mindset with realistic objectives for its global capabilities. It will not be able to take on the Verizons and AT&Ts of the world. Rather, it will need to offer a distinct set of services aimed at regional, not global, players. That will require scale and investment, with possibly an acquisition to get that scale and the service delivery capabilities.
Telstra re-organises to re-boot international aspirations
Telstra has folded its Enterprise and Government unit into a new Global Enterprise and Services division, which will lead its charge into Asia, and includes Network Application Services, Global Applications and Platforms, a new (unnamed) cloud division, and Telstra Ventures. The other two new consolidated divisions are Telstra Retail and Telstra Operations.
With its declining legacy businesses and small domestic market, Telstra had to do something to reinvent itself; focusing on Asia is a substantial part of its answer. Telstra also has some global opportunities within its existing MNC customer base. However, this renewed focus is in its early stages in terms of products and channel to market. Taking cloud and managed services to market in Asia requires partnering with local companies that know the nuances of a particular market. Telstra understands this; even so, it should not underestimate how important such local partnerships will be, or how important it will be to have Telstra-badged employees on the ground for sales, service delivery, and support/fulfilment.
Telstra should focus on its multinational corporate customers first. It needs to convince its own customers it can provide global services. Telstra has work to do on refining its global addressable market, product suite, and focusing on the right customers. There will be a mix of wholesale customers as well. The firm is also missing a global MNC mobility offer; this has to be one of its immediate pain points among MNC customers.
Being successful in cloud services requires scale. With global and super-regional telcos from other parts of the world beginning to attack Telstra on its home turf and making inroads into Asia, the operator will need to scale up quickly to gain share before its competitors do and to justify the investment in associated infrastructure – whether technology, network, or operations. This includes the service delivery capability to deliver on the promise that global MNCs will demand. As part of its global aspirations, Telstra said it continues to evaluate acquisition and partnership opportunities within Asia to expand its capabilities and footprint.
LTE-A and LTE-B given more focus for mobile
Telstra also gave more details on its domestic mobile network strategy, which continues to set it apart from its rivals in terms of network quality, reach, and speed, especially in regional and rural areas. Telstra has currently deployed LTE using 20MHz of spectrum in the 1800MHz band in Brisbane, Adelaide, and Perth, with 15MHz spectrum blocks utilised in Sydney and Melbourne. The LTE1800 network will reach 85% of the population by the end of 2013 (3,500 base stations).
Telstra has also been trialing LTE using the 900MHz band and plans to launch LTE-Advanced 900/1800MHz services in 2014, with CAT-4 devices (maximum download speed of 150Mbps) in heavy traffic areas. In 2014, it plans to trial 700/1800MHz LTE-A with CAT6 devices (peak download speed of 300Mbps, also using 4×4 MIMO). Trials are also earmarked for LTE-Broadcast and small cells (including launching HetNets for capacity management in high-capacity areas) in 2014.
Telstra plans to launch LTE at 700MHz in early 2015 (its 20MHz of spectrum becomes available in January 2015). This Digital Dividend spectrum is a key differentiator for Telstra, as it has more than Optus, while Vodafone has none. Not only will it help Telstra’s high-speed data performance in metropolitan areas; it will also provide an enhanced LTE coverage solution to regional/rural areas that so far only have LTE over 1800MHz spectrum.
While Telstra’s mobile network is clearly ahead of its rivals in terms of coverage and technology evolution, other parts of the business (such as its connected home and multiscreen strategies) lag the US, and some European and Asian markets. But we do not believe this really matters. Such businesses are at their nascent stage of development globally and Telstra stands to learn best practice from its global peers. Telstra also faces little in the way of significant competition in these areas.
Nicole McCormick is a senior analyst at Ovum.