Telstra diminished within five years, analyst claims

Telstra diminished within five years, analyst claims

Telstra will fragment into smaller, unstructured units and suffer competitive buy-outs within the next five years, an industry analyst predicted yesterday.

The carrier's total share in national and international retail telecommunications markets has dropped from 58 per cent to 52.5 per cent this year, and will fall below 50 per cent in 1999, according to telecommunications analyst Paul Budde.

Budde's findings are published in his latest industry report: Telecommunications Strategies 1998/1999.

"Telstra is the first incumbent carrier in the world that will see its market share drop by 50 per cent (since the introduction of competition)," Budde said.

He said that while Telstra might defend its position with impressive profit results in the short term, the long-term outlook remains doubtful. "I'm not looking at a $3 billion profit tomorrow, I'm looking five years down the track," he said.

Given that one lost market percentage point equals around $100,000 in lost revenues a year, Budde argues Telstra is facing further losses. "Next year, Telstra's profit will go down, I guarantee it," he said.

Budde attributes the gloomy outlook to Telstra's lack of vision and innovation, abandoned infrastructure plans, poor customer service, unproductive corporate culture and ongoing legal battles with new and emerging local carriers.

In addition, Budde said, Telstra has failed to extend its business to international markets. "It doesn't have a clue what it is doing around the world," he said.

The research findings show service providers picked up Telstra's losses. Service providers such as Hutchison Telecommunications and AAPT stand to capitalise on the market changes, achieving 62 per cent revenue growth in the past year to capture overall market share of 27 per cent.

Telstra's closest rival, Optus, has remained stable with around 20 per cent market share.

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