Telstra moves to improve network with $3 billion in investment after its painful outages

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Telstra is spending an extra $3 billion over three years to remove the “pain points” causing network outages and to build longer term improvements in its technology and infrastructure.

CEO Andrew Penn, in announcing the telco’s annual results today, made direct reference to a series of embarrassing network outages this year.

“Work still needs to be done to improve our systems and processes that can cause customer frustration and delay, and to ensure that we consistently deliver a great service experience,” Penn says.

“We know that customers expect more from us as their reliance on smart devices continues to grow.

“This is why improving the customer experience is paramount, and why network interruptions in the second half were particularly disappointing.”

Penn says Telstra is retiring old technology and systems that slow down.

Telstra will boost capacity in key networks to cater for increasing demand, building 4G network capabilities while laying foundations for the 5G network.

Pain points

Short term actions are being taken to remove “pain points”.

Penn revealed that Telstra’s internal tool it uses to gauge strength of customer relationships, its NPS score, fell by four points over the year.

“We continue to simplify the business and recognise the things which can frustrate customers about our products and service are often the same things adding cost to our business,” Penn says.

The detail on where the $3 billion will be spent is light because, Telstra says, it doesn’t want to alert its competitors.

Telstra’s capex to sales ratio in the next three years will be about 18%, the highest since 2009 when the telco was building its 3G network.

In 2016, the ratio was 15.2% or $4.045 billion, up from $3.589 billion in the previous year. Much of the increased capital expenditure was used to extend 4G services.

“Our customers and our networks are our biggest assets,” Penn says.

“We must invest to set new standards and deliver excellent experiences for our customers.

“The investment is about setting the pace for the network and company of the future, just as we have done in each of the previous network generations.”

“The opportunity is clear as average monthly data consumption on our networks increased seven-fold over the past five years, with mobile traffic growing almost nine-fold in the same period.”

The next generation of networks

Details of the investment program will be progressively confirmed during 2017 to 2019 financial years to maintain strategic advantage in a heavily competitive environment.

A significant proportion of the investment will go towards transforming the next generation of networks.

Penn says investing in digitisation is also a critical part of the extra funding, building on work in recent years to remove manual processes.

This includes expanding digitally-enabled sales and service channels so that customers can interact with Telstra on their terms, as well as introducing capability to better pre-empt issues faced by customers.

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