Telstra restructures internally to target Asia

Telstra has unveiled details of its strategy to take advantage of Asia’s rapidly growing appetite for cloud and managed network services.

The carrier today revealed it has heavily reorganised its network application services and enterprise divisions to point the business squarely into Asia. It also flagged potential hundreds of millions of dollars in capital spend to establish its presence offshore.

Telstra group executive global enterprise and services, Brendan Riley, said the carrier had merged Telstra Global and Reach with its Telstra Enterprise and Government division to create a Global Enterprise and Services unit. The new division had also absorbed Telstra IP Management and its Network Application Services business.

Speaking at the Telstra’s investor day in Sydney today, Riley said entering Asia was crucial for the carrier to scale, pointing to the likelihood that China will become the world’s largest economy by 2017 and that GDP across the region will double sometime in the 2020s.

“We need to be in it to win it, so we need to be in those markets and going with that growth and also supporting customers searching for that growth,” Riley said.

The carrier also needed to capture the rise of the global enterprise, he added.

“All of the customers I speak to are global in some way, whether it’s their customer base or their supply chain, they’re leveraging a technology solution from a technology partner from some part of the world to drive their business," Riley said.

"So we know that we need to be a globally integrated and globally operating part of Telstra."

The carrier’s main focus for its global push would be its Australian customers operating offshore, and multinational companies operating out of economic hubs of Singapore, Hong Kong and other parts South East Asia

Also speaking at the investor day, Telstra chief financial officer, Andrew Penn, flagged increased investment in the region.

“We have very significant infrastructure already in the region and we will continue to invest in that and build on that as we look forward to execute our strategy,” Penn said.

The carrier’s level of capital investment offshore would depend on foreign investment rules and its equity position in any overseas ventures, he said.

“I would expect us to have some involvement in infrastructure build and therefore some capital investment but I would expect that to be in the order of hundreds of millions of dollars, not billions."

Telstra chief executive David Thodey said the major component of its investment was already sunk into its undersea cable assets  - which he said was on par with other providers in the region.

“I would say our IP core network across is equal to if not better than anyone else in the region. And, of course, as we’ve layered over unified communications, managed network services and cloud computing, it’s become a pretty rich network,” Thodey said.