Today, Telstra Corporation Ltd (ASX: TLS) held its Annual General Meeting (AGM).
Both Chairman John Mullen and Chief Executive Andy Penn addressed the (virtual) audience, outlining the firm’s achievements and strategy moving forward.
Here are four takeaways from the AGM, and why shareholders should take note.
TLS share price
1. Leaner and meaner
Telstra may be the biggest telco in Australia but it’s been pumping iron and trimming the fat.
The business has reduced Consumer and Small Business plans from over 1800 to just 20 plans.
The workforce is one-third smaller. Four layers of management have been cut. $2.3 billion of costs have been stripped out with a further $400 million expected over FY22.
In 2018 when it announced its T22 strategy, the market was sceptical the business could turn it around. Now, Telstra is leaner and meaner.
2. Realistic or content?
Mr Mullen made an interesting comment regarding Telstra’s customer experience:
“While our objective is to provide an exceptional customer experience the reality is Telstra is simply too big and too complex to ever be 100% perfect in this regard”.
It’s rare to hear a chairman be so candid. An optimist would say Mr Mullen is telling it how it is. Telstra will never be perfect and that’s okay.
However, a pessimist would argue its this kind of lax attitude has led to its current reputation.
3. Light at the of the tunnel
It’s easy to bash Telstra for the successive years of profits and subsequent share price slides. However, the business has faced several headwinds beyond its control.
“The reality is that Telstra has lost over $6 billion of profit in the last decade or so, predominantly from the impact of the nbn but also the loss of voice revenues, sms revenues, global roaming and other pressures” – Mr Mullen
What’s been disappointing is Telstra’s response to the changes.
Rather than focus on the core business, it relied on outside investments.
The T22 strategy refocused the business on its core activity – providing great telecommunications service. Now it’s ready for growth.
4. From defence to offence
Telstra’s T22 strategy aimed to stem the bleeding. The business radically took out costs and digitised its activities. Now it’s time to go on the offensive.
“If T22 was a strategy of necessity, T25 is a strategy for growth” – Mr Mullen
Under its new strategy – T25 – the business will return to growth. It will grow mobile services, improve fixed services profitability, turn around enterprise and grow new adjacencies such as Health.
Earnings are expected to grow, with dividends to likely increase in the future.
In summary, Telstra’s shifted from defence to offence.
