Telstra chief executive Sol Trujillo has shrugged off the potential financial effects of being excluded from the National Broadband Network process, saying that in a "perfect" scenario, Telstra only stood to lose $1 to $2 billion from its annual revenues.
Telstra CEO Sol Trujillo
(Credit: Telstra)
In a presentation at a Citigroup conference in the US, the details of which Telstra released this morning, Trujillo claimed the effects on the company of its fall from NBN grace had been blown out of proportion.
Trujillo pointed out that the NBN would only become a reality if enough funding could be found — something he considered uncertain in the current financial climate, if technical issues such as sub-loop copper unbundling and national security were addressed, legislative changes passed and if the network builder could carry out the roll out effectively.
Even if all of that occurred, Trujillo believed the ultimate effect on the telco would be low. "Rational analysis would suggest that at most a mid single digit percentage of revenues or perhaps $1-$2 billion may be at risk, and that is over an extended period of time because it takes time to build all this. And even if you build it, it's not a guarantee that it's going to work," he said.
According to Trujillo, the current retail metropolitan traditional telephony traffic, which he said only accounted for 25 per cent of revenues, could be migrated to the HFC cable network which Telstra intends to upgrade to achieve a maximum of 100Mbps up from its current top speed of 30Mbps.
Regional customers could possibly be brought onto the Next G network, or alternate fixed options such as buying access from the NBN. The company also already covered 92 per cent of the population with ADSL, and 80 per cent with ADSL2+, he said.
Time was on Telstra's side, a spokesperson for the telco said, pointing out that the longer the network builder needed to get the NBN up and running, the more time Telstra had to get people onto its own network. Once on board, they would stay, the spokesperson believed.
"The consumer will always decide on what's in their best interest," the spokesperson said. "A quantifiable service from Telstra versus a hypothetical one."
Trujillo's presentation included a table which quantified Telstra's NBN risk. It said that non-metropolitan retail, wholesale and government revenues, which accounted for 13, 4 and 2 per cent of 2008 revenues respectively, would be affected by a "perfect" future network.
When mitigating factors such as declining wholesale business and migration of customers to Telstra networks were considered, these percentages came down to Trujillo's estimate of a "mid single digit" in total.
Parts of the business which Telstra did not believe would be impacted included content, mobile advertising and mobiles.
I get the feeling that Telstra can build anything these days because it is spending so much money on marketting that it has sucked itself up into its own out of control vortex.
The message is loud and clear Sol - you simply can't build it.