Thanks for sharing your story. I don't use presently use Telstra myself. But that doesn't stop me from considering them to be an investment of enormous potential.
Firstly let me pose a scenario. There are, speaking very generally, two ways to make money in business. Either by operating on low margins on, hopefully, high volume or high margin high (perceived) value service.
Most mockers of TLS appear to have their mind stuck on the low margin high volume style of business. This business model is the hardest to succeed in and the hardest to maintain for the simple reason that there is always someone out there trying to undercut you. There's no money in giving stuff away. This is why VOIP in itself is an unappealing business for business people - because it offers little profit. Any serious business hoping to succeed in VOIP is either providing the hardware or hoping to find something else to add on top because VOIP calls themselves offer little profit. How much money is Skype making from Skype to Skype calls? Absolutely nothing because they are free. They hope to make money from Skype to non Skype calls but the saving is ok while the technology is still crap. Their real money making strategy proved to be to build a loyal group of adherents, a marketing list, to sell to a bigger company. To make serious money in discounting you need to try and capture the bulk of the market.
TLS is not and never has been in the discount business. They are in, as Buffett might describe it, the franchise business. They are about, as much as possible, monopoly. Their retail arm, especially when operational separation hits, will be increasingly competing hard however that is largely inconsequential to their overall future. TLS future is where it always has been - providing a service/network that noone else can match. In the future when you want "go anywhere telecommunications interactivity offering everything you want when you want it whereever you want in Australia at the touch of a button" it will be provided to you either by TLS direct or by someone onselling TLS product. TLS have most if not all the shovels using the old gold rush analogy.
People need to get realistic about the numbers here. I see people on HotCopper get excited because some very minor IT&T type company makes announcements that might make a million dollars here or there. TLS is spending $10 billion - TEN BILLION DOLLARS over the next five years on a next generation IP network (and yes Coonan is right, they will spend it - the current games are about trying to get some public money involved). By the way how much profit will the rest of the industry combined make over that time? I don't know but I would be surprised if it surpasses that figure. (Optus net profit after tax for Sep quarter was $150 million, having declined 8.1%. If they hold their ground then that's $3 billion over the next 5 years, the rest probably won't make that between them).
You talk about going to iPrimus. They, and others like them, might continue to build a neat little niche business but that's all it will ever be.
No company in this country has the pockets to compete - look how Optus tried to mount a case they should be allowed to participate in TLS proposed new network - so they can have access to nationwide broadband that they can't hope to put in place by themselves. The only hope for other telco's is in regulation preventing TLS gaining monopoly and in enforcing access to their networks.
Will they perform well over the short term, say the next two - three years? No they will not. There is much money to be spent in many areas. Earnings will continue to decline as margins continue to work back to the mean. (TLS margins are extraordinary on a world scale). Yet still they will offer a good yield whilst building the next generation of their business. Once I am ready I will be accumulating for the next five years with an eye to the following 10-20 years.
Sorry for a long post folks.
TLS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
(20min delay)