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The operator said it would begin selling energy to its employees on a trial basis, before rolling out the service to the wider public next year
In November last year, Telstra announced a considerable organisational reshuffle that saw the business split into three separate entities: InfraCo Fixed, which owns Telstra’s physical infrastructure assets like ducts, fibre, and submarine cables; InfraCo Towers, owning the company’s mobile tower assets (49% of which was this year sold to a Future Fund-led consortium for $2.8 billion); and ServeCo, Telstra’s retail business.
But perhaps even more interesting was the company announcing plans to move into energy retail, hoping to leverage its relationships with roughly five million households and nearly one million small businesses.
The company will not be explicitly involved in energy generation itself, but instead already invests in renewable energy projects that could theoretically power around 100,000 homes.
It took until July this year for the company to receive authorisation to sell electricity and natural gas to customers in New South Wales, Queensland, South Australia and the Australian Capital Territory, as well as applying to supply those in Victoria.
Now, Telstra has announced that it will initially begin trialling its energy products with its own employees, with a wider rollout to the general public expected to take place at the end of the 2022 fiscal year.
Customers will be able to manage their energy plans via Telstra’s ‘My Telstra’ app, which is already being used by customers to control their fixed and mobile plans.
As connectivity is increasingly viewed as a utility alongside gas and electricity, it seemingly makes sense to bundle these services together, especially for an operator like Telstra who has proven itself very progressive when it comes to energy usage, being certified as carbon neutral in early 2020.
On the other hand, in the past, similar projects around the world have largely failed, partly due to the nature of the product itself. Unlike connectivity products, which typically have relatively stable pricing, energy prices fluctuate regularly, making bundling the two items together difficult.
Nonetheless, Ben Burge, head of Telstra’s energy business, remained positive about the project, saying that one of the major advantages Telstra has over its energy competitors is significant differentiation.
"In telco, particularly in the mobile experience, you are literally purchasing a differentiated experience,” he said, adding that he would have “crawled over broken glass to access the marketing assets that Telstra has at his disposal” in his previous role in the energy sector.
But despite this optimism, Burge was quick to emphasise that the company expected new revenue growth in this area to be “measured” rather than explosive.
“We have to get the basics right for those in the market who are most at risk before we earn the right to scale up in a way that might reshape the way the markets work,” he said, noting that problems with energy can be disastrous for consumers.
Ultimately, Telstra are positioning the move as part of their wider focus on sustainability.
"Pushing into retail is therefore a natural extension of what we’ve been doing for several years and will augment our efforts to accelerate the decarbonisation of the Australian grid," he said.
If Telstra’s foray into energy resale proves successful, it could well prove something of a watershed moment for the industry, convincing numerous telcos to follow suit.
In related news, the Australian government recently agreed to co-finance Telstra’s acquisition of Digicel Pacific, largely in an effort to stop important infrastructure in the region from falling into the hands of a Chinese company.
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