John Linton ....if it hadn't been so "bleeding obvious" four years ago that HSPA and VoIP were infinitely better longer term investments than playing around with ADSL2 DSLAMs for a year or so.
I was looking forward to the Telstra publication of their annual results yeterday but was sort of disappointed at what was made available in the early media reports:
http://business.theage.com.au/business/telstra-profit-jumps-10-20090813-eipa.html
as it didn't seem in line with the half year results as announced by El Sol some months ago - and for those of you with short term memory loss (like me) or just plain disinterest some of the figures can be found here:
http://business.theage.com.au/business/telstra-profit-jumps-10-20090813-eipa.html
Even the first financial analysis in today's early editions was equally 'fuzzy' as evidenced by Elisabeth Knight's assessment here:
http://business.theage.com.au/business/telstras-future-is-not-clear-cut-20090813-ejy0.html
I was particularly surprised by the apparent dis-connect between El Sol's claim ofÂ
"Retail broadband (BigPond) grew revenue by almost one-third in a maturing and very competitive market"
in the half year report to David Thodey's statement of:
"Fixed retail broadband revenue was $1.5 billion, up 15.9 per cent on the previous corresponding period"
in the full year report.
Where did the missing 17.1% go in the next 6 months of trading? Or more exactly how did Bigpond go from recording growth of 33% in the first six months of FY2009 to finishing the 12 months at 15.9%? Does that mean there was virtually no growth at all in the second six months of FY2009? Maybe I'm reading the numbers incorrectly and will have to wait for the sensible financial and industry commentators to analyse the full figures - a 16% growth is still very impressive but not nearly as exciting as a 33% growth (which I think I opined at the time would have been virtually impossible to achieve in the quoted "maturing and very competitive market"). We will have to wait and see what the ABS statistics for the FY2009 year state as being the overall growth rate of the wire line broadband market but the early indications seem to be that last year's "12%" will be a single figure result for FY2009 so it would seem that Telstra has managed to 'hold it's own' with its effective growth of 8% of the total market growth over the past 12 months (and perhaps some less kind, and certainly less refined, person than I am would describe that as Telstra's perennial position) in the ADSL marketplace despite the promise in El Sol's earlier statement that Telstra had blitzed the market courtesy of its ADSL2 services and aggressive 'win back' campaigns.
What was very impressive was Telstra's growth in HSPA broadband:
"Wireless broadband revenue grew by 69.2 per cent to $587 million"
A 70% growth is truly impressive and the annual revenue has now very rapidly reached around one third of the revenue from wireline broadband in far less time than it took for Telstra's ADSL revenues to exceed half a billion dollars. If Telstra's other statement:
"however there was a significant slow down in subscriber growth in fixed broadband over the year."
is going to represent an ongoing trend then it might be that HSPA revenues will equal or exceed ADSL revenues before the end of calendar 2011 - a little earlier than generally predicted. Of course, so many casual observers will say that HSPA will never replace broad band because of blah, blah, blah.....and undoubtedly that's true in certain market segments. But copper wire is truly in the last of its sunset years and not much more is possible to derive from it while wireless is in its very early stages of development and a great deal can be expected to come out of today's research and development labs around the world. Solving back haul costs, spectrum congestion, latency issues, among dozens of current issues, remain to be done - if they can be done at all......but the current growth of HSPA versus ADSL, not just as evidenced in Telstra's current reporting but similar reports from the EU and the USA, is quite clearly a trend that seems unlikely to 'turn around' in the next year or so. But, for the skeptics, let's see what happens in the FY2010 half year reports early next year.
The other 'proof of concept' figures in Telstra's full year figures was the steepening of the decline in wire line telephone revenue:
"PSTN revenue, from services including local and international calls, dropped 4.9 per cent on the previous corresponding period to $6.3 billion."
Now this could be ascribed to the strong growth in mobile revenue but if you really look at the statement that immediately follows it seems far more likely that the mobile growth was mainly from add on revenues and particularly data over mobile revenues. The steepening decline in Telstra's telephone line rental and voice call revenue would be caused by the steepening up take in VoIP used in business and residential implementations where companies like Exetel no longer use any Telstra lines or call charges in the major operations of our day to day business - and this is becoming more common as each day passes.
There are undoubtedly many other inferences/interpretations that can be derived from these early reports and doubtless as more details become available and sensible people make their assessments of them different views will emerge. Before moving on to doing some real work I am pleased that the first report that relates to our industry seems to confirm that three of our most time consuming and expensive decisions of the past few years appear to be exactly correct.....but then perhaps I just want to believe that?
PS: Another view quoting ome unreferencd numbers:
http://www.businessspectator.com.au/bs.nsf/Article/3G-pd20090814-UW286?OpenDocument&src=sph