Sunday, April 26, 2009

Australia: Mounting IT costs for the transformation of Telstra are presenting it with severe problems

[The Australian] TELSTRA may be forced into large writedowns and the reduction of financial targets in coming months as widespread problems with Sol Trujillo's $12 billion transformation project come to light at board level.

This will add to already intense investor pressure on chairman Donald McGauchie in light of the federal Government's $43 billion broadband network project, which will restructure Australia's telecommunications sector.

The company is facing fresh blowouts in the cost and timing of its $3 billion-plus information technology overhaul.

Revenues in its consumer division are also lagging, operating cost targets are being missed and customer service is at a new low.

As well, delayed payments for $1.7 billion of technology work under way will hit the company's profits, and the global financial crisis is beginning to bite telecommunications companies around the globe.

The problems are believed to have been uncovered during last week's final interviews with Telstra executives seeking a replacement for Sol Trujillo.

Telstra trauma as tranformation costs mount

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