Telstra faces legal challenge over decision to scrap third-party billing

Telstra faces legal challenge over decision to scrap third-party billing

Telco’s decision could impact Impelus earnings in $700k

Credit: Dreamstime

Digital marketing engine provider, Impelus (ASX:IMS), has flagged its intention to take Telstra (ASX:TLS) to court over its decision to stop providing direct carrier billing services (DCB), as of 2 March 2018.

Telstra Carrier Billing is a payment option that lets customers subscribe to content like apps, music, eBooks and movies or TV shows on their mobile phone or tablet, with the charges being added to the customer's Telstra bill.

The decision to stop providing the services was announced by Telstra in August 2017, as reported by the ABC, which affected all Telstra DCB partners. The move will effectively see third-party service providers no longer able to charge mobile content subscriptions to Telstra customers' bills.

Impelus was placed on trading halt on 30 January in relation to “a potential change in circumstances in relation to its legacy DCB operations”.

Impelus said on 1 February that it believed that Telstra had the obligation to continue providing the services beyond 2 March.

In its most recent announcement, Impelus said it tried to resolve the issue with the telco but without success.

“Impelus’ strong position is that Telstra has a continuing obligation to provide it with the services after March 2, 2018 and intends on initiating proceedings in the Supreme Court of New South Wales (Supreme Court) to seek injunctive or expedited final relief to prevent Telstra from ceasing to provide it with the Services from March 2, 2018,” the company told shareholders on 9 February.

Impelus said it is “extremely disappointed” with Telstra “after having shared such a long and successful relationship in DCB for more than 4 years”.

Impelus had previously referred to the DCB operations as non-core, as the company is reducing the investment in this area as it focuses on its technology-led digital performance marketing business

However, the company stated that premature withdrawal of the services in March 2018 will have a material impact on Impelus' FY2018 revenue and earnings before interest and tax. The company estimates that the impact on EBITDA for FY2018 is in the range of $550k to $680k.

At the time of the announcement, the ABC wrote that Optus was reviewing its third-party content relationships, following a report by the Australian Communications Consumer Action Network (ACCAN) that revealed 12 per cent of respondents experienced unexpected third party charges on their mobile phone bills.

“Applied to the mobile customer base of Telstra, Optus and Vodafone, this 12 per cent equates to almost 1.9 million people who could have received unexpected charges on their mobile bills. We estimate that collectively, consumers may have been charged as much as $20 million unexpectedly in the last six months,” said ACCAN director of policy, Una Lawrence, at the time the survey was announced. 

“ACCAN is calling for better protections to be put in place so that consumers don’t get caught out with unexpected charges on their mobile bills.”

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