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Telstra Corporation Ltd SWOT & PESTLE Analysis

Last Updated : 29 May, 2017

OVERVIEW

Name of the Company: Telstra Corporation Ltd

Business Sector: Telecom

Operating Geography: Australia and New Zealand

About the Company: Telstra is a leading telecommunications and technology company with a growing international business, and a heritage that is Australian. They offer a broad suite of connectivity, media and content to consumers and businesses in Australia, cloud and other technology services to business, enterprise and government customers, as well as connectivity services to carriers globally.

Revenue: A$27.1 Billion– FY ending March 2016

SWOT & PESTLE Analysis

The SWOT analysis for Telstra is presented below:
Strengths
Weaknesses
1. Dominant market position
2. Strategic differentiation by being the leaders in network.
3. Investments in latest technologies
4. Expansion in key markets
5. Cordial relations with regulatory bodies.
1. Operational inefficiencies and unsatisfactory customer service.
2. Suffers from latency issues when compared to competitors Vodafone and Optus
3. Priced higher than competitors
Opportunities
Threats
1. Venture into international markets like China,Asia-Pacific
2. Step into new businesses and projects
3. Renewed focus on services
1. Saturated mobile market in Australia
2. Complex telecom regulatory compliance laws in different countries.
3. Rapidly changing technology
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Strengths

1) Dominant market position: Telstra is Australia's incumbent and largest provider of fixed-line services.These include home phone, business and other PSTN products. Telstra Mobile is Australia's largest mobile telephone service providers, in terms of both subscriptions and coverage.Telstra operates Australia's largest GSM and 3G UMTS mobile telephony networks,as well as holding a 50% stake in the 3GIS Ltd 2100 MHz UMTS network infrastructure, shared with Hutchison .

2) Strategic differentiation by being the leaders in network: Considerable investments in transforming the next generation of networks as well as in fixed network services.Their 4G networks cover 98% of the Australian population and they are on track to reach 99% of the population by 2017.

3) Investments in latest technologies: In 2016,they enabled the capability to switch on LTE broadcast technology across their entire 4G coverage area thus allowing them to cost effectively broadcast high quality video media to a number of metropolitan and regional areas around Australia.They also launched Australia’s first Voice over LTE(VoLTE) service that allows voice calls to be carried on the 4G service for the first time.They are also planning in-field trials across metropolitan and regional areas for narrowband Internet of Things(NB-IoT) technology.

4) Expansion in key markets: Telstra is pursuing new opportunities in key markets like Asia through Telstra Health,Telstra Software Group and Telstra Ventures.Through Telstra Health it offers technology services designed to reduce inefficiencies,improve productivity and increase quality of HealthCare.Through Telstra Software Group it aims to create long term global growth in markets adjacent to Telstra’s core business.And through Telstra ventures ,it continues to invest in high growth technology companies .

5) Cordial relations with regulatory bodies: Telstra communicates regularly with governments on a range of commercial, policy, regulatory and other matters in the interests of its shareholders, customers and employees.It has a Regulatory Affairs team which manages its relationship with statutory regulators and industry bodies.

Weaknesses

1) Operational inefficiencies and unsatisfactory customer service : Telstra has occasional quality, process and customer service problems owing to their huge scale of operations .

2) Suffers from latency issues when compared to competitors Vodafone and Optus: Latency — the measure of the time it takes for a packet of data to travel between two points on a network — is dominated by Vodafone on the 3G network, and drawn between Optus and Vodafone for 4G. Vodafone’s 72.02ms average on 3G and 54.71ms average on 4G are slightly ahead of close second place Optus’ 87.39ms and 51.88ms, but both beat Telstra’s 94.47ms and 56.26ms results.

3) Priced higher than competitors: Telstra’s mobile service plans bear relatively higher price tags than Optus and Vodafone.Thus it becomes less appealing for budget smart phone users

Opportunities

1) Venture into international markets like China,Asia-Pacific: The internet users of China have reached 298 million up at a high of 42%. Also the internet penetration of China is at 22.6% which is very low and thus has a lot of room for improvement. Chinese internet market can stimulate company's growth seeing from the its expanding at present.Also there is growing demand for high speed broadband and proliferation of smartphones and tablets throughout Asia.

2) Step into new businesses and projects: Telstra can look at alternate but related business ventures and leverage its existing core competencies to kickstart these new ventures.

3) Renewed focus on services : Telstra can boost its cloud services ,both public and private cloud and the whole gamut of services being offered presently ,to cater to small and medium sized enterprises

Threats

1) Saturated mobile market in Australia: Majority of the revenue sources presently lie in the Austalian market,however this market is close to being saturated.

2) Complex telecom regulatory compliance laws in different countries: There are stringent regulations in the telecom sector in different regions such as licensing, price control, service-level agreements, interconnection, radio spectrum management, and access to infrastructure. Telstra needs to dismantle all regulatory barriers inorder to gain entry into new international markets.

3) Rapidly changing technology: Technologies are undergoing lightning changes and these changes may render equipment, services and technology obsolete or inefficient, which may adversely affect the competitiveness or require the companies to increase their capital expenditures in order to maintain the competitive position. Telstra needs to be responsive to analyse these changes early on and build products and services leveraging the new technology.

Telstra SWOT analysis has been conducted by Chithira Sajeev and reviewed by senior analysts from Barakaat Consulting.

References

1. Telstra Annual Report 2016: https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/2016-Annual-Report.pdf

2. Digital Repository Law: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1369&context=fclj

3. Telstra Home: https://www.telstra.com.au/?direct

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