Telstra breaks down $3bn network investment

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Telstra breaks down $3bn network investment

Architecture overhaul.

Telstra is expecting to reap $500 million in benefits annually at the end of a three-year, $3 billion investment into its network, which it today revealed would span its core networks, digitisation, and customer experience.

At its full-year results in August Telstra pledged to spend $3 billion over the next three years to improve its networks and customer experience.

The investment followed a series of damaging outages that affected various areas of Telstra's networks earlier in the year.

At the time the telco declined to provide detail on how it would allocate the money.

Today, during its investor day briefing, Telstra broke down the spend into three categories: $1.5 billion will go to its networks, $1 billion will be allocated to digitisation, while as much as $500 million will go towards customer experience.

Telstra CEO Andy Penn said the investment was expected to deliver run rate EBITDA benefits of more than $500 million annually by financial year 2021. Two thirds of that figure will be a result of additional revenue, while one-third will arise from cost improvements, he said.

The $1.5 billion network portion of the investment will include a network architecture overhaul based on software-defined networks (SDN)/ network functions virtualisation (NFV) by FY20, and preparing its networks for 5G.

It also wants to be able to deliver double the speeds of standard 4G to 87 percent of the population by the end of FY19 by leveraging its spectrum holdings, and up to 1Gbps peak mobile speeds in "core" CBDs and certain high-traffic areas within capital cities by the end of FY19 thanks to its new network architecture.

The telco has also signalled an intention to ensure 85 percent of ADSL customers moving to the NBN have a "quality" video streaming experience during their transition.

Telstra expects to start closing its 3G network in FY20 as 5G reaches scale.

The $1 billion digitisation spend is targeting a "common architecture" for its systems that offers a "holistic and consolidated view of customers".

It is aiming to have 50 percent of its applications retired or moved to the cloud by FY20, compared to the current 17 percent, and to be processing 70 percent of customer service transactions through digital channels, up from the current 58 percent.

The telco also wants to achieve 70 percent of IT projects delivered through agile/DevOps by FY20 from the current 20 percent, and to have straight-through processing of 95 percent of consumer NBN orders by the same date, compared to less than 5 percent presently.

Improvements to customer experience - which have been allocated $500 million over the next three years - are aiming for a 3-6 point lift in the telco's net promoter score, which fell by four points as a result of this year's outages.

Telstra hopes to achieve the lift by improving its sales and services, simplifying its product experience, and focusing more on growth from within its existing customer base than new customers.

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