00:00 I wasn't surprised about the fact that they will further have to cut costs, but the enormous
00:08 amount of the size of this particular cost cutting is of course tremendous and it's something
00:15 like an oh my God moment within Telsa that it's not just a matter of continuing to fine
00:21 tune or readjust, this is a massive change and that obviously the reason is that it's
00:27 absolutely necessary for them, otherwise more serious developments are going to happen in
00:32 its company.
00:33 So it's a serious decision and it's a serious event that's happening at the moment.
00:38 So it suggests therefore that Telstra feels itself on the back foot when it comes to its
00:43 competitors?
00:44 Yeah, I mean Telstra of course the reality is that telecommunications is a utility.
00:51 The value add is going to the digital companies and Telstra and telecommunications in general,
00:56 you know, they are utilities based companies.
00:58 So cost cutting is absolutely critical because there is not new revenue.
01:05 Revenue is flat, you know, 1% up, 1% down on an annual basis.
01:09 So at the same time, costs as we know are rising 10%, 20% over the last year alone.
01:14 So you really see this dramatic change in cost custom in order to ensure that the company
01:22 remains viable, that it can deliver the profit.
01:25 It's not growing through revenue, it's really growing through the cost cutting exercises.
01:31 I think, you know, we the customers have been conditioned to a lower level of customer service
01:36 over years because of the robots and call centers and things like that.
01:41 So I think we are conditioned to a level of customer service that we wouldn't accept five
01:45 or ten years ago.
01:47 You know, the whole development with new technologies, AI, robots, etc. that will be more and more
01:53 less human interface and more and more computer interface and obviously that will have an
01:59 effect on customer service.
02:01 But as we are already conditioned to the level of customer service that's now, I don't think
02:06 it will have a major further result on the customer service as we are getting it at the
02:14 moment.
02:15 Right.
02:16 Who are Telstra's biggest competitors for?
02:19 Optus, of course, is the biggest competitor, particularly in the enterprise market where
02:25 there is competition.
02:26 Macquarie Telecom is also a very successful operator in the enterprise business and obviously
02:31 TPG Vodafone is a big competitor, but that's mainly on the mobile market in the consumer
02:38 market.
02:39 So you say that cost cutting is the way forward for Telstra.
02:43 It can't really grow the business.
02:45 Do you therefore see more job cuts coming?
02:47 Yeah, that's the reality.
02:49 You also reflect that in the market price that we just heard.
02:53 It's a matter that the market starts to understand that Telstra is not a high-tech company.
02:59 It's a utilities-based company.
03:01 The market doesn't expect new sort of revenues.
03:04 I mean, we have regularly the hype, 5G will bring new revenues.
03:10 Of course, 5G simply replaces 4G.
03:13 So no more new revenue.
03:14 So that's the reality in the telecommunications industry as we are seeing it.
03:19 So yes, cost cutting will remain on the agenda for many years to come.
03:23 If you compare Telstra with the digital media companies, then their cost is still so much
03:28 higher than the digital media companies.
03:31 So that is the effect of a very sort of legacy system that Telstra and the other telcos have
03:38 and they've missed that boat in moving bigger into the digital media where they could have
03:44 higher profits, higher margins.
03:46 And yeah, this is the result of it.
03:48 So how do you see the company's future then, Paul?
03:51 I think there will be further restructuring.
03:53 I mean, if you go into utilities, then you start seeing a separation between networks.
03:58 We might see more network sharing to cut cost in that particular area.
04:03 It does – at a certain state, it doesn't make sense to have all these different infrastructures
04:07 running into people's homes or whatever.
04:09 So I can see that there's cost cutting exercises possible in that particular area.
04:15 So yes, I think it's still going on.
04:17 It's still not a matter of that new revenues are flowing in.
04:21 So on the other side, it's a matter of utilizing more technology.
04:25 Artificial intelligence will be a hot topic because they can streamline the company, they
04:30 can streamline customer services.
04:32 So they will invest more in technology rather than in people.
04:35 bowl.
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