That’s an interesting thought.
If I were CEO of Telstra, what would things be like, what would I do differently to the current (and past CEOs).
Let me first state that the idea of a listed company is to release returns for its shareholders, and get them a return on their investment in the company, so I will definitely consider this as a key point in the below.
1. Use the ACCC as a weapon against itself.
I would take the ACCC up on its offer over regulatory certainty on ADSL2+ services, with regard to the requirement to not declaring wholesale rates.
I would definitely accept that.
Because I believe there’s more money to be made from the monopoly on the ADSL2+ infrastructure in regional areas, and if competitors don’t invest there, that’s there loss, no I wouldn’t just keep it retail either, I would wholesale, this is because of the damage to the Bigpond brand name, where many just associate Bigpond and expensive together. So, I would wholesale it, and retail it and do it on higher price terms to ensure they don’t just enjoy reselling us and start investing themselves.
If the ACCC then overturned its decision, I would use that as the basis of my campaign against the ACCC’s regulation (and only it as the basis).
This would leave me able to go in as a clear winner, because competitors have demonstrated they are able to invest in ADSL2+ retail products on their own, and I would definitely challenge a move by the ACCC to regulate ADSL2+, when others have it themselves.
So that would be move 1. Get ADSL2+ running and fulfill demand for ADSL2+ services where no one else has invested. Make the money while we can, before the technology supersedes itself, because Shareholders need returns on their ADSL2+ investment..
2. Arrange for collection of all consumer views.
The reason for this is, in order to get shareholders a fair return on their investment, I would first need to assess the source of the income (no income, no return, right?). So, I would listen to all the consumers current desires in aggregate form, and basically hit one problem out at a time.
Find solutions to the problems that consumers are having, and turn them into happy customers, a happy customer is a long term customer (something Netspace and iiNet both didn’t get the idea of).
Now, before you say this is outlandish, and too far fetched, I disagree. It wouldn’t take armies of staff resources, and would add value to the companies reputation which has been going downhill somewhat. Listening and actioning on consumer complaints by volume will ensure that at least the big issues are looked at, reviewed, and hit square on the head, thus enhancing the income source, and perhaps increasing it, and therefore increasing returns to shareholders.
3. Investigate current asset potential
I would then proceed to investigate the asset the company uses to bring it its customers (and therefore income and therefore returns to shareholders).
I would assess the value of the asset, and what upgrade paths it had, what could we do to enhance our utilisation of the asset to generate better returns, including wholesale access to this asset.
The potential income from a copper wire is both small and massive. It can be used to provide a $0.50c voice service, or it can be used to supply much more, and I would definitely look at all upgrade options to determine what we could do (including FTTN and FTTH) to service consumers with better speeds.
Then after reviewing upgrade paths, I would look at cost reduction, and determine what costs are involved in that asset and how they can be reduced.
That would release returns to shareholders.
4. Develop a business plan
Notice that’s number 4 and not number 1 ? The first mistake you would make is making a plan with bugger all knowledge of what the company is doing as it is.
Plan business goals, over short, medium and long term.
Place this plan into action, and watch its outcomes, develop points where you expect to see results and check the actual result with the expected. If it wildly differs, evaluate plan.
This plan would be the ideal behind bringing in the extra income for shareholders, and therefore a not so critical, but still highly important part of return on investment for shareholders.
5. Watch the enemy.
The enemy is the competition. Keep your friends close, but definitely, keep the enemy closer.
They spend a dollar, you want to know where and what, so you can discover their plans, and certainly either better them, or counter them.
This is a part of returning investment to shareholders, as if a competitor has better value or better priced plans, you can kiss your own income (and therefore shareholder returns bye).
6. Evaluate the current offerings
Right across the board, determine who has the best value offering. Then, determine the costs of supplying that offering. With that in mind, determine the competitor’s goals, and if they are going to gain market share, counter it, by dropping prices or adding more value to the services to keep customers on board.
This adds shareholder value, by increasing customers, or maintaining marketshare, thus, maintaining income and therefore, returns to shareholders.
7. Evalute business costs
Determine where the business spends its money, and how we can hang onto more of it if needed.
If the business is dropping a lot into R&D, sweet, maintain it if the R&D team are not hopeless.
If the business is paying staff to do the jobs of machines, get the machines working.
If the business has high exec bonuses, and the business isn’t performing too well, or has high staff numbers then needed, drop their bonus, afterall, performance is performance.
On the other hand, if the business has investments in progress and is spending on investments, great, maintain the spending and increase if necessary, shareholders get their returns faster if a investment takes 10 minutes and not 10 years.
Those are the top 7 I can immediately think of.
I did place a few situations there though.
One I did leave out is dropping prices on backhaul to encourage monopoly / competition investment. I would want to ensure I could make the most income out of all the current assets, and to do that I would want to make sure I wasn’t stopping anyone investing, because in stopping investment, I might shoot my self in the foot because someone else might duplicate and destroy any value I could have made in that investment by dropping price.
So I would definitely drop prices on backhaul to encourage DSLAM deployment investment, and therefore get better returns for shareholders (better them paying for the network usage 24/7 at a “premium ish” rate, then them building their own backhaul network and forcing us down).
Basically, I would do all that the current idiot isn’t doing: Using the current investments to generate a better return! There’s money to be made off the ADSL2+ DSLAMs rolled out, enable them, competitors will invest sooner or later, so milk it while you can. And the same for fibre backhaul, eventually, someone is going to fix it. Somehow. And when they do, all those months and years I could have made truckloads from selling it at a just above highest rates (some will pay that!), would have been destroyed.
It’s like Sydney Homeowners saying their house is worth a gold mine. It’s not if they don’t sell in the current boom.
All it’s going to take for those prices to fall is businesses to rollout elsewhere (and that’s not so far fetched), and those values would come crashing down as everyone looked for housing elsewhere.
So, the Telstra management certainly are not doing all they can to give shareholders a return on their investment. There’s a lot that can be done, without any change to regulation, and without any legal action, or anything really, just a price adjustment, and profits could rise something noticeable…