Telstra reveals biggest restructure since privatisation

Telstra has announced it will split into three separate businesses in the biggest shake-up to the company since it was privatised in 1997.

The country’s largest telco provider’s existing infrastructure business InfraCo will be separated into two separate entities. InfraCo Fixed will operate Telstra’s fixed line assets, while InfraCo Towers will own and manage the company’s mobile infrastructure.

A third business, ServeCo, will own the active parts of Telstra’s mobile phone business, which also includes its radio access network and spectrum assets that maintain the network’s coverage.

Telstra’s changes would provide the company an opportunity in the future to spin off its infrastructure assets.

Telstra chief executive Andrew Penn said the restructure would unlock value and allow the telco to take advantage of potential future “monetisation opportunities”.

“Our proposed new corporate structure reflects this new world and will help us support the foundation for it,” Mr Penn said.

“The proposed restructure of our organisation provides us the optionality and opportunity to better realise the value of our infrastructure assets and, in an evolving and competitive market, helps us focus on continuing to provide the best experience to our customers.”

Telstra’s T22 strategic overhaul implemented in 2018 has already slashed more than 6000 jobs from the company, which it says has been to drive more efficiency.

InfraCo was also set to give the company an opportunity to buy the National Broadband Network. Mr Penn said Telstra would seek third-party investment in InfraCo Towers.

“Telstra intends to start seeking investment from third parties while maintaining control of our strategic towers and preserving our competitive differentiation for Telstra’s mobile business,” he said.

Providing guidance on future earnings, Telstra said it was confident it could turn underlying earnings back to growth, setting an EBITDA target between $7.5 billion and $8.5b for financial year 2023.

Mr Penn said the mobile business was performing strongly, particularly in the sale of new 5G phones and plans.

“Our clear lead in 5G means we have the opportunity to capitalise on a new multi-year cycle of growth and our transacting minimum monthly commitment has continued to grow in financial year 2021,” Mr Penn said.

“We already have more than 400,000 5G devices on our network and we expect that to reach around 750,000 by the end of the calendar year.”