Telstra CEO: Connectivity will remain key focus for company

Posted on: Wednesday, 4th June 2014

Telstra CEO David Thodey believes that the provision of basic connectivity will continue to play a major role in the company\’s future – despite threats of disruption to the company’s “cash cow” from Google and other global players.

But he has also expanded on Telstra’s future technology roadmap: detailing its focus on robotics, e-health and analytics, and on the important role that partnerships will play in bringing R&D to market.

Delivering a keynote address on innovation to a Committee for Economic Development of Australia in Melbourne, Thodey said he was less bothered by local competitors than about potential global entrants. And he said the company had no choice but to grow and deliver the next generation of innovative technology to countries in the region.

“I don\’t think of my local competitors, I think about global competitors and how they are going to disrupt our business model,” he told the CEDA audience. “While we\’re having this great debate which is very important about the budget and what is going to be cut and not cut, the world is accelerating past us. The debate we urgently need to have is how are we going to invest in our competitive advantage in a global world.”

Thodey said he\’d been in Silicon Valley during the last two weeks hearing from technologists who warned that disruption to the telco business model was inevitable. But while he said all businesses were susceptible to disruption, he also foresaw a continuing role and business model around connectivity.

“People would come in to the room and look at me and say you\’re a telco. And I\’d say yeah, I\’m a telco. And they\’d say you generate a lot of cash. Yes, we generate a lot of cash. And they\’d say well look, we think your business model is dead. You\’re going to be disrupted,” he related. However, the Telstra CEO added that while there were many new entrants thinking about how to create lower cost infrastructure that allowed people to connect – including plans by Google to put up a network of 150 satellites – there was a larger problem around connecting that network to local infrastructure.

“So while there are disruptive technologies, you still need people who operate locally. So I think it will be a mixture of both, it will be innovative technology and good local infrastructure,” Thodey said.

FUTURE BETS: Thodey also provided further thinking around the company\’s future technology roadmap and how it plans to innovate to stay ahead of its competitors, particularly around e-health, robotics and data analytics. He noted that Telstra’s own model of bringing R&D to market had changed and would rely on partnerships with other industry players in future.

He told the CEDA audience that the company\’s old research facility in Clayton on the outskirts of Melbourne had not been good at getting new technology to commercialisation. However, he said Telstra still needed to “be a part of the eco-system and put ourselves at risk.”

“We\’ve really concluded that that model doesn\’t work for us, but partnerships are really important. And that\’s why we\’ve worked really hard in the last nine months to really start to form partnerships with different enterprises, different educational institutions,” he said, pointing to last week\’s announcement around partnering with National ICT Australia, Deakin University and others.

“We think that in a truly competitive market you\’ve got to start building partnerships, it\’s got to be a collaborative environment, and you\’ve got to take some bets about where you want to go. So for us, we\’ve made some bets – it\’s e-health, robotics and data analytics. Those are the three areas that we\’re really going to focus in on,” he said.

Thodey also reiterated his desire for Telstra to be a major player in Asia, though he pointed out that the company was committed to making its Asian play from Australia.

“Great companies are able to grow, deliver value to shareholders and innovate at the same time. I don\’t subscribe to this thing about saving your way to prosperity, you\’ve got to grow, you\’ve got to be pushing the limits but in a sensible way.

“So that\’s why at Telstra we think we\’ve got to expand geographically, we\’ve got to be part of Asia. I\’ve never committed to getting to a certain number by a certain date, but we are committed to doing it. We want to be a great company in Asia,” he suggested.

Geoff Long

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