Telstra’s position as the telco heavyweight in Australia seems unshakeable; the NBN windfall is secure and there might actually be more cash headed its way.
However, while tight grip on the domestic market is one thing, staying ahead of the international trends shaking the sector to its core is another.
Just like it’s global peers Telstra adapting to a rapidly changing landscape – one where the traditional revenue channels are falling by the way side and customers are exerting a greater influence.
In his keynote address at the annual analyst event in October, Telstra CEO David Thodey compared the telco’s customer advocacy journey to running a triathlon, and Forrester Research analyst Clement Teo reckons that’s just about the right analogy.
In a recent blog post outlining how Telstra is placed in its planned transformation, Teo says that Telstra is making progress, but there’s still a long way to go.
While Telstra is the top dog in Australia its prospects in new market categories inside and outside of Australia are less certain, Teo says.
“We do not believe that Telstra is particularly innovative compared with service providers in the US or Europe, but we do believe that it has a viable transformation strategy and is making progress.”
What’s impressive, according to Teo, are the inroads Telstra has made into the Australian media and entertainment industry.
“Its progress in the Australian media and entertainment industry, including its Foxtel investments, is impressive — it has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers,” Teo says in his post.
The customer advocacy trope is now front and centre for all telcos, with Telstra, Optus and Vodafone also professing their commitment to using Net Promoter Score (NPS) metrics. However, Teo maintains that a successful customer advocacy strategy requires more than just raw metrics.
Teo says that Telstra needs to use its Net Promoter Score (NPS) metrics to drive cultural change. One example of this could be how the metrics can be used to improve the transactional process of device purchasing from a Telstra-branded retail store and how easily each purchase is completed.
Interestingly, he also points out that an overreliance on NPS metrics doesn’t necessarily deliver the desired outcome.
“Our research indicates that NPS is not enough, especially when it comes to explaining ‘the how and why’ that are so critical to becoming a world-class customer experience brand,” Teo says.
As Ovum’s Nicole McCormick pointed out last week,Telstra’s ambitions as global carrier will need to be tempered with a realisation that it can’t take on the Verizons and AT&Ts of the world.
Rather, its focus needs to be regional and it has to pick and choose which set of services it chooses to offer.
One possible avenue, highlighted by Forrester’s Teo is Telstra tapping into the budding demand in network-based services, by pushing its submarine cable network, IP network, and network-based communications service capabilities as an international play.
“In this space, Telstra remains focused on network connectivity, including managed network services, and integrating the Australian and international networks into a single delivery platform,” Teo says.
“These will help Telstra (and Telstra Global) orchestrate network and communications services for its feeder market clients — those with home bases in Australia, the US, and Europe entering into Asia.”
Mixed signals on ICT
The one deficiency, pinpointed by Teo, in Telstra’s overall transformation strategy is the mixed signals it’s sending about its ICT ambitions.
Teo argues that telcos are not traditionally seen as natural ports of call for procurers of enterprise IT services other than connectivity services. What that means is that at some point all telcos venturing into IT services, including Telstra, will face resistance.
While Telstra has had notable enterprise wins, like with Australia’s Department of Defence, Teo reckons the days of “easy wins” are over.
“As Telstra moves into broader categories of ICT and services, buyers become more diverse, more politically sensitive, and typically span many more roles inside enterprise organisations than the traditional network manager,” Teo says in his post.
“Hence, Telstra’s opportunistic approach means that for enterprise customers, it will probably be exposed to some mixed experiences.”
Another potential weakness, according to Teo, is that Telstra is yet to fully flesh out its enterprise mobility solution, and how its recent investment in Kony Solutions fits into the overall picture.
“Telstra has begun to provide a clearer strategic vision, but questions remain in key areas, such as how it plans to integrate consulting and systems integration into its offerings,” Teo says.
“Telstra claims to be betting on a global rollout of network services and applications for enterprises, but we believe that there are solutions — like getting users “on-net” via mobility solutions in emerging markets — that cannot be easily or rapidly replicated outside Australia, given its challenger status.”