Telstra creates new digital unit - tosses in fun stuff

Telstra has re-focussed its ambitions to morph into a media-centric carrier, consolidating all its media businesses into a single division - Telstra Digital Media.

Telstra’s digital media assets, including Foxtel, earn $AU4 billion in annual revenue and employ approximately 4,000 people. The new division will manage Telstra’s end-to-end media capabilities from Sensis, BigPond, Trading Post, IPTV, Foxtel and its raft of content arrangements.

The new unit will also invest $AU100 million over four years to upgrade its media infrastructure for consumer and enterprise grade services. “As digital media and video content continues to grow it is important that we build network infrastructure to meet this demand. We will also continue to integrate this content, making it available to our customers across multiple channels including mobiles, tablets, home entertainment systems and the internet,” Telstra CEO David Thodey said.

Highlighting Telstra’s aggressive move into IPTV, the carrier has poached TVNZ’s CEO Rick Ellis.

Ellis, a ten-year veteran of the New Zealand broadcaster announced his resignation from TVNZ this morning, with Thodey later revealing his new role.

"I was presented with this opportunity and when I reflected on the scale of it and the interesting stage that media and communications are at in the Australian marketplace it was obviously of interest to me," Ellis said. He will take up the role which reports to Thodey in early 2012.

The new management structure will see Bruce Akhurst, the CEO of Sensis, and JB Rousselot, the head of Media, reporting directly to Ellis.

Telstra affirmed that it is on track to achieve its guidance of low single digit percentage growth in total revenue and EBITDA at Telstra’s annual update for institutional investors. The September quarter reflected strong growth in mobile customer numbers and had also added fixed broadband customers. Thodey warned that there had been a shift in the mix of growth expected in fiscal 2012.

Significantly Sensis, once an advertising cash cow, had experienced satisfactory but lower than expected take-up of digital products by SME customers.

Additionally, the rate of decline in Yellow print directories has also risen significantly as market dynamics change more rapidly than expected. Sensis is expected to post percentage declines in the high teens for the full year, driven mostly by the demise of the Yellow print directory.

He also reported that work on fixing customer service issues was proving effective generating $AU622 million in productivity benefits in fiscal 2011 and are flagged to deliver an even greater benefit in fiscal 2012. ®