Telstra confirms loyalty program signsup, higher NPS in full-year results

ASX-listed telco reports lower revenue, EBITDA and net profit for FY19 but flags progress in customer engagement under T22 strategy

More than 770,000 Telstra customers have signed up to the telco’s revamped customer loyalty program since its launch in April.

Telstra confirmed the enrolment numbers as part of its full-year financial results for the year to 30 June 2019, announced to the ASX today. The telco reported a 3.6 per cent decline in reported total income to $27.8 billion, along with a hefty 21.7 per cent drop in EBITDA to $8 billion. In addition, net profits decreased 39.6 per cent to $2.1 billion.

According to Telstra, the key reason for the lower earnings and profit results is the ongoing national broadband network (NBN) rollout, which the company estimated had already adversely impacted EBIDTA by $1.7 billion in recent years, including a $600m hit this past financial year. Telstra also estimates it’s only halfway through recurring financial impact from the nbn.

The financial results also come one year into what Telstra is calling its T22 strategy, a transformation program aimed at simplifying products and services to customers while introducing a host of efficiency improvements, further digitisation and network innovations as well as monetisation of $2bn in assets by the end of FY20.

So far, the program has seen the telco slash consumer and small business plans from 1800 to 20, introduce no lock-in plans across fixed and mobile offerings, removed excess data charges in Australia, and launch a commercial 5G service.

However, the transformation as well as national shift to the nbn has also resulted in plans to slash 8000 direct workforce roles from the group. According to the latest financial results, about 75 per cent of these roles have been identified, while another 1500 new roles in areas such as cybersecurity and software engineering have been earmarked.

In a statement, Telstra CEO, Andrew Penn, said the results reinforced the importance of the T22 strategy one year in.

“FY19 has been a pivotal year for Telstra. Notwithstanding the intense competitive environment and the challenging structural dynamics of our industry, it is a year in which I believe we can start to see the turning point in the fortunes of the company from the changes we have embraced,” he commented.

Penn highlighted the move to just 20 products for consumers and small businesses as a key milestone. “This simplification is good for our customers and it makes life easier for our people,” he said.

It’s also seen call centre volume drop by 22 per cent, or nearly 7.7 million fewer calls to the consumer and small business call centres in FY19. Overall, Telstra’s episodic Net Promoter Score (NPS) rose to +25, 1 point higher than targeted and +6 points up year-on-year, while strategic NPS lifted +3, further notable results.

Across the full year, Telstra added 378,000 net retail post-paid handheld mobile services, including 181,000 from its discount brand, Belong, bringing total post-paid customers up to 8.2 million. It also added 230,000 wholesale mobile virtual network operated services over the past year bringing wholesales services to 1.2 million.

Telstra also added 659,000 new nbn connections, and 107,000 net new fixed-line retail bundle and data services, half of which came from Belong.

On the digital front, Penn noted digital experiences now account for 16.8 per cent of sales across consumer and small business customers as well as more than half of service transactions, such as account management, prepaid product and billing enquiries. The telco has also added a dedicated team to handle live chat orders.

In addition, Penn highlighted the launch of Telstra Plus, the telco’s new customer loyalty plan, noting 770,000 customers are now enrolled and earning points. The tier-based program officially kicked off in May, and sees customers accumulating points that can be exchanged for discounts on devices and accessories. Customers also get access to sport and movie ticket discounts, complimentary extras and VIP services, and several offerings previously available under its predecessor, ‘Telstra thanks’.

To help accelerate sign-ups, Telstra offered those signing up before 30 June 10 points for every $1 spent on monthly account and pre-paid recharges. The telco anticipates up to 8 million customers could be accessing the Telstra Plus customer loyalty program.

“Returning our business to growth will take time,” Penn concluded. “However, I have great confidence that our strategy can arrest the decline in our earnings and create opportunities for growth.

“Today we are already a very different, much simpler and more customer-focused organisation than we were a year ago and we are well positioned for the era in which we are about to head – the 2020s.”

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