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Telstra refines strategy, realigns key business units

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Telstra today announced a refined long term strategy supported by business unit changes aligning senior leaders to growth opportunities in Australia and overseas.

Telstra CEO David Thodey said the realignment would ensure Telstra focused on the critical areas of customer service excellence, core revenue and growth.

Speaking at a Telstra investor day in Sydney, Mr Thodey said Telstra must continue to focus on its core Australian business while exploring new opportunities domestically and internationally, particularly across the Asia region.

Telstra’s strategy now has three pillars evolving from the previous four pillars –

  • Improve customer advocacy;
  • Drive value from the core; and
  • Build new growth businesses.

“Our strategy is simpler and more impactful. It makes our ambitions clearer and shows where shareholders can expect us to continue building value,” Mr Thodey said.

“We must serve our global customers at international scale, leveraging our expertise into Asia and other regions, while seeking to deliver outstanding customer service every day in every home, street and business around Australia.

“This strategy provides greater organisational clarity around our growth portfolios. New businesses such as global applications and platforms, cloud solutions and e-health were not opportunities three years ago and can play important roles as we head towards 2020 and beyond.”

The investor day reviewed Telstra’s performance in key growth areas such as Network Applications and Services, mobile network expansion, digital media and global applications and ventures. Full presentation materials are available online.

Telstra strategy refinements

Telstra’s three-pillar strategy simplifies the previous strategic framework developed in 2010, reflecting the company’s evolution in its customer-focused journey and identification of new opportunities.

  • Improving customer advocacy reflects progress from customer satisfaction and retention and is a stand-alone proposition across the company. There are four major sub-pillars: Telstra’s use of the Net Promoter System, product differentiation, process improvement focus and creating a uniquely positive customer service experience.
  • Driving value from the core concentrates on customer and revenue growth, network superiority and driving productivity through simplifying the business. This pillar has four key focus areas in 2013-14: mobiles, fixed broadband, transitioning Sensis to a digital business and broader productivity improvements through simplification plans.
  • Building new growth business is centred on network services, Asian expansion, e-health and longer term growth opportunities such as digital media and global applications and platforms. These will change over time while the focus on growth opportunities remains constant.

Telstra’s capital management framework, announced by the company in 2012, remains unchanged.

The framework guides management decisions according to a set of criteria and provides transparency for shareholders.

Telstra portfolio changes

Following Telstra’s new strategic pillars, key portfolio changes in the business include –

  • Global Enterprise and Services: Brendon Riley appointed Group Executive of a new $5 billion revenue business unit operating as a global scale, industry-based services and solutions business.

Riley’s responsibilities will include Network Application Services worldwide, Global Applications and Platforms, a new cloud division, Telstra Ventures, Telstra Enterprise and Government and Defence.

The unit reflects rapid growth in key portfolio areas and the global market in which these services
are provided.

  • Telstra Operations: Kate McKenzie appointed Chief Operations Officer, now including the Chief Technology Office and innovation portfolios to better integrate technology development and implementation. The function’s leadership was reorganised in an operational review earlier this year. Telstra Operations will lead Telstra’s ongoing technical excellence across fixed and mobile networks; and
  • Telstra Retail: Gordon Ballantyne appointed Group Executive bringing together key retail-facing segments including Telstra Consumer and Telstra Business, products, National Broadband Network product, sales and marketing, Telstra Country Wide and the Chief Marketing Office. Ballantyne will also have responsibility for growth through the new e-health division. He will have key aspects of Customer Sales & Service and Innovation, Products & Marketing portfolios.

Chief Financial Officer Andrew Penn will work with Mr Thodey and Telstra International Group President and Group Executive Tim Chen to enhance Telstra’s Asia strategy, drawing on Mr Penn’s extensive experience across Asia Pacific markets. Group Executive Corporate Affairs Tony Warren will again lead Telstra’s negotiations with the Federal Government on the National Broadband Network. All portfolio changes will be effective Monday 28 October.

Other CEO leadership team members reporting to Mr Thodey remain unchanged: Rick Ellis, Group Executive Telstra Media Group; Tracey Gavegan, Group Executive Human Resources; Stuart Lee, Group Executive Telstra Wholesale; Carmel Mulhern, Group General Counsel; and Robert Nason, Group Executive Business Support and Improvement.

“These changes make sense because they reflect our business needs and the exciting and rapidly moving environment around us,” Mr Thodey said.

“Structure follows strategy so we have asked some of our most senior leaders to take on new or expanded opportunities to ensure we deliver on these promises. Each executive has considerable experience inside the industry as well as other industry sectors or global markets.”

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