Telstra to become an energy retailer as company restructures

In early November, Telstra announced plans for its biggest restructure since privatisation, splitting into three legal entities: InfraCo Fixed, owning and operating Telstra’s physical infrastructure assets such as ducts, fibre, data centres, subsea cables, and exchanges; InfraCo Towers, owning and operating Telstra’s physical mobile tower assets; and ServeCo, Telstra’s retail business. 

 

Telstra believes that the reshuffle, due to be completed at the end of next year, should help to unlock value from the company’s infrastructure assets, with intentions to seek investment from third parties  for the tower business, while ultimately retaining control.

 

However, perhaps more interesting is their plans to move into energy resale. 

 

"We already underwrite projects that generate enough renewable energy to power about 100,000 homes," explained chief executive Andy Penn. "And we provide standby power that enables more renewable energy to be absorbed into the energy grid. We deploy machine learning and IoT to change the way that we use energy.”

 

“We also have a very experienced energy team. All of these things help us affordably access more renewable energy. And we also help some of our large customers do the same. We are exploring bringing this experience to the table with a consumer offer leveraging our strong in-home position with our customers, the investments we have made in the digitisation of our customer systems and our Telstra Plus loyalty program.”

 

Telstra is something of an expert in sustainability, having achieved carbon neutrality back in July – albeit in part through supporting external green initiatives in Australia and India in order to achieve the necessary carbon offsets.

 

But expertise or not, telcos dabbling in energy retail historically do not perform very well and Telstra will need to tread carefully. Being able to bundle energy and broadband is surely an appealing prospect, but it remains a significant challenge since energy prices fluctuate so much more frequently than those of communication services.

 

That said, with the coronavirus bringing the importance of connectivity into sharp relief for customers around the world, connectivity is increasingly being viewed as an essential commodity on par with water and electricity – why shouldn’t telcos move to occupy that space in a sustainable way? 

 

“We see a great opportunity in energy, where we are looking at how we leverage our knowledge, market position and skills in a way that could add value to our customers and Telstra as an energy re-seller,” said Telstra Group Executive Kim Krogh Andersen in a Linkedin post earlier this week. 

 

“We already have significant skills and capabilities in energy and deploy machine learning and #IoT to change the way that we use #energy. All of these things help us affordably access more renewable energy. And we’ve helped some of our large customers to do the same. We intend to bring all of this experience to the table with a consumer offer.”