Australia - Telstra has been winning large numbers of customers through its spending campaign

[business spectator] Telstra’s billion-dollar-plus cash splash is now sending waves rather than ripples through the telecommunications sector.

In a presentation to a Macquarie Group conference today Telstra’s David Thodey provided an update on the impact of last year’s decision to spend $1 billion on improving its customer service and to make it offerings more price-competitive. At its half-year results he revealed the strategy of buying customers was working, with more than a million new customers, mainly in mobiles.

Today’s update shows that across the board it is adding customers, with another 364,000 mobile services added in the March quarter. For the nine months to March, Telstra added 1.3 million new services, compared with only 271,000 for the same period last financial year. Post-paid mobiles were up a net 197,000 for the March quarter and 494,000 for the nine months.

It also added 141,000 bundles of product in the third quarter, with 561,000 net new bundles sold for the nine months to March against the 146,000 added in the same period previously. Where previously its retail fixed line broadband customer base was shrinking, there were 47,000 new services added in the third quarter and 186,000 for the nine months.

Thodey would also have been pleased that sales of the relatively new T-Box and T-Hub products are gaining real momentum, with 67,000 sold in the March quarter and 281,000 for the nine months.

All up, another million customers were added in just the three-month period to end-March.

While the new customers might be coming at a steep cost, in this pre-national broadband network period it is critical that Telstra rebuilds its customer base, retaining as many fixed-line customers as it can for eventual profitable transfer of their connections to NBN Co and building the mobiles customer base that will be a key to its infrastructure-based future.

In his presentation Thodey also confirmed that Telstra remains on track to launch its 4G wireless broadband network by the end of this year. The group has previously said the network will be focused on the major CBDs, but it will free up significant capacity on the existing Next G network and help Telstra maintain its network quality advantage over its rivals.

With Vodafone suffering badly from network congestion and degradation issues, Telstra’s new-found aggression has, with hindsight, been exceptionally well-timed.

The key issues, of course, are whether it can maintain the momentum and/or retain the new customers. With most of its bundled offers and, one assumes, its post-paid wireless plans, locking customers in for two years it has every chance to do so if it can deliver better customer service than it has in the past.

The other thing Telstra has going for it, which Thodey also referred to, is that its financial muscle, its ownership of Sensis and its 50 per cent interest in Foxtel give it the capacity and the relationships to get access to content that differentiates its offerings.

Last week’s AFL broadcasting rights deal included for the first time rights acquired by Telstra that will enable it to stream games live over the Next G network or to its T-boxes as an IPTV offering. It has also struck a deal with Foxtel that will see a tailored Foxtel product including about 30 channels streamed to the T-Box, as well as an on-demand service.

In the post-NBN environment Telstra won’t be competing in the fixed line space purely on price and brand (although it will need to be competitive) but will be able to offer unique content, like live sport, which will give it a unique competitive advantage.