Weekend Edition: The future for telcos

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NAB Morning Call 27 min 1 speaker 7 chapters transcribed 22 days ago
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Why are traditional telco revenues like calls and texts disappearing?

Phil Dobbie 0:01
The telecommunications industry is undergoing massive change. Old reliable incomes like phone calls and text messaging are disappearing. And in the online space, well it seems the revenues are all being taken by the big tech firms in California. So how does the local industry survive and prosper? The answer? Data centers and fiber connectivity. The morning call from NAB with Phil Dobby.
Luke Coleman 0:25
The weekend edition.
Phil Dobbie 0:27
Now, I did many years ago work in the telecommunications industry, running marketing at Aussie Mail, for example, then when there was a that land grab for broadband customers. I was also a journalist in the industry for many years, podcasting even back then, before it was fashionable. But the industry has moved on. The focus is now less on putting broadband connections into homes, 'cause everyone's already got one of them. It's uh more about what happens online, data centers. AI and all that sort of stuff. So what's Australia's part in all of this and what are the investment opportunities in an industry that was once and often been described as nothing more than a utility play? Well let's get an update from Luke Coleman.
Phil Dobbie 1:06
He's now the CEO of the Communications Alliance. He's new into the role, just a few months into the role. It's a body that represents the interests of the industry. It works with the government on regulations and codes of property.

How is the shift to data‑centric services reshaping Australian telcos?

Phil Dobbie 1:17
practice and the like and it's also uh I guess a a body that acts as a bit of a spokesperson for the industry as well. So Luke, welcome. Where is the investment happening right now as far as Australia is concerned?
Luke Coleman 1:30
Bill, great to be with you. Thank you for having me. It it has been a period of seismic change when it comes to what I would call the digital infrastructure landscape. Telco is certainly part of digital infrastructure. Telcos are digital infrastructure operators, but in recent years we've seen some real changes um in the way that telcos position themselves in the market. Market, uh, which certainly has ramifications for investment. So if you look back over the last three to five years, uh the biggest player in Australia, Telstra, uh, separated its infrastructure assets into a separate vehicle called Infraco. Uh so that is their fiber optic cable assets, their ducts, uh, their the pit and pipe infrastructure, as well as um
Luke Coleman 2:20
Um mobile tower assets, which all of the major mobile operators have spun out their passive infrastructure assets, the mobile towers themselves, and then they're leasing back capacity on those towers to build their radio access network. So there's been an interesting kind of separation of the puzzle pieces of telcos, which had historically been all In-house where a telco would own the towers, would own the fiber, would own the ducts, would own the radio equipment on the towers. The telcos have realized actually there's a really interesting passive income stream that can be made from those assets. And if we can collect some capital today by selling off those assets to a private investor, then we can redeploy that capital into our networks.
Luke Coleman 3:09
So that was stage one. That's So somebody buys let's bring it up. So somebody buys a for example For
Phil Dobbie 3:13
example on that, just uh just say somebody buys a mobile tower, for example. You might have a town, you've got two mobile towers from two competing operators. If it's actually an opera not operated by those those telecommunications companies, but uh operated by somebody else who leases space on it, then they both can share the tower. So everyone wins.
Luke Coleman 3:29
Yeah, that's right. So so the telcos are seeing opportunities here if it's um sharing towers or sharing network assets in some cases. Uh and certainly in areas where it's much more challenging to make the the commercial case stack up for an investment, typically being in regional and remote parts of Australia. One of the big developments over the last couple of years was uh what's called the mocking, the multi operation. operate a core network, which Optus and TPG have agreed to do. Now originally Telstra and TPG had sought a mock-in, but that was blocked by the competition regulator.

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