Telstra plans 'most significant’ restructure in its history

Plans to split into split into three separate business units

Telstra is to undergo its biggest restructure since 1997, splitting its business into three different units and positioning it to spin off its infrastructure assets. 

The move will see Telstra’s infrastructure business InfraCo split into two separate units while a third unit will oversee its mobile business. 

Infrastructure will be split into InfraCo Fixed, which will own and run Telstra’s fixed line assets, and InfraCo Towers, which will own the mobile infrastructure. 

Meanwhile, the third, named ServeCo, will own the active parts of Telstra's mobile business, including the radio access network and spectrum assets. 

CEO Andy Penn said the move was designed to help the telco “better realise the value of [its] infrastructure assets”. 

“The challenges and disruptions of the last six-to-12 months have reinforced the increasing value of infrastructure assets globally; the importance of the digital economy, not only to business but to the whole of Australia and its economic recovery; and the dependence of the digital economy on telecommunications as its platform,” he said. 

InfraCo was established in 2018 as part of the telco's T22 strategy as a standalone infrastructure business unit that oversees its data centres, non-mobile related domestic fibre, copper, hybrid fibre-coaxial (HFC), international subsea cables, exchanges, poles, ducts and pipes. 

It was touted at the time that the move was designed to position Telstra if it decided to buy NBN Co, should the broadband builder be privatised. 

The proposed restructure is scheduled to be completed by December 2021. The three business units will operate under the parent company Telstra Group. 

The latest business overhaul follows Telstra’s restructure announcement of 2019 whereby it revealed plans to cull 6,000 jobs in a bid to reach a cost out target of $2.5 billion by the end of 2022. 

As part of the update on 12 November 2020, Telstra reaffirmed its  profit forecasts for financial year 2021, claiming earnings would hit between $6.5 billion and $7 billion, and estimating between $7.5 billion to $8.5 billion by fiscal 2023. 

The overhaul announcement comes on the say day the teclo was directed to comply with the Australian Communications and Media Authority (ACMA) after a customer relationship management (CRM) system was cited as the cause behind Telstra overcharging 10,000 customers almost $2.5 million over a 12-year period