Telstra Investments

telstra investments

Telstra expands its presence in the media space with a 51 percent stake in Fetch TV

Telstra recently purchased a $50m stake in Fetch TV for a 51 percent slice of the content aggregation platform. The telco will invest another $50m into the streaming service, bringing the evaluation to $100m. Astro Holdings, Fetch TV’s former majority shareholder, will now own 49 percent of the platform.

While some see Telstra’s move here as odd, it could be a significant step toward a better media strategy. After all, Telstra offers a content aggregation platform of its own – Telstra TV – which uses an outdated Roku set-top box. Telstra’s agreement with Roku is ending, and Fetch TV might be the smart move to make.

Beyond that, Telstra has made other nontraditional investments lately, indicating the telco’s willingness to pivot from its norm. So could the telco’s diversifying investments be its new strategy?

In this article, we’ll tell you about the Fetch TV deal and discuss why Telstra diversifies investments. Read on to find out.

More about Telstra’s $100M slice of Fetch TV

Fetch TV includes a set-top box that can stream aggregate content from apps like Netflix, YouTube, Amazon Prime Video, and more. You can also view local and international TV channels and more. The streaming device entered the Australian market back in 2008 under the ownership of Astro Holdings. 

Telstra has now purchased a majority stake in Fetch TV for $50m, with another $50 in investments that include provisions to onboard Telstra TV customers to the Fetch platform. If the deal is approved by the Australian Competition and Consumer Commission (ACCC), Telstra will own 51 percent of Fetch TV, while Astro would be left with 49 percent.

Fetch has a 670,000 active subscriber base, and they partner with other services including Optus (Telstra’s biggest rival in the telco space) Vocus, and Aussie Broadband. It’ll be interesting to see how these rival telcos deal with Fetch TV if the ACCC approves the deal with Telstra.

Fetch TV chief executive Scott Lorson has hailed the deal as one that “will allow Fetch TV to accelerate growth”. The CEO also stated that, while Fetch TV has 670,000 active subscribers, the number goes up to 750,000 billings when you count those who use the device and service in more than one room.

Telstra’s bottom line could be the driving force behind recent investments

If we let Telstra tell the story, we would believe the largest telco in Australia always performs well financially. But this is never the case in any market.

Telstra described its financial results for H1 FY22 (the first half of this year) as ‘continued growth in its underlying business, with particularly strong performance in mobile’

However, a closer look at the telco’s latest financial report shows some decline in critical areas. Here’s a closer look:

  • In the six months leading to December last year, Telstra recorded a 9.4% decline in total income.
  • Most of that total income decline was NBN related.
  • According to Telstra’s report, EBIDTA also saw an annual decline of 14.8%
  • The reviewed 6-month period also showed Telstra’s net profit declined from AU$1.09bn to AU$680bn.

Telstra seems to be looking for ways to pivot – to invest more into other sectors for a better outlook. We’ve seen this over the years in a series of moves as the telco tries to rebrand itself. While the telco’s T22 strategy sought to simplify its structure and products, part of its T25 strategy focuses on creating sustained growth and leading network and technology solutions.

For Telstra to experience the growth it plans for, it must make strategic investments outside the norm, such as its recent Fetch TV deal. 

Why Fetch TV?

Telstra already has a streaming service called Telstra TV. The telco uses a Roku device as a set-top box, but its deal with Roku is set to expire. A stake in Fetch TV, which has a better set-top box, could end Telstra’s relationship with Roku. 

Telstra TV will move to Fetch TV boxes to offer its service, giving the telco a better chance at competing with the technology giants in the streaming media space, such as Google, Apple, and Amazon. 

According to Telstra’s executive in charge of technology Kim Krogh Anderson, “While the current Telstra TV product remains popular, the underlying technology platform needs to evolve to support a deeper level of engagement through content offers, account management and rewards through Telstra Plus,”

Telstra’s deal with Fetch comes during significant competition in the streaming space. Netflix, the most popular streaming service in Australia, recently reported that it lost subscribers for the first time. A swift 35 percent decline in share prices followed, and the technology giant has been looking for ways to sustain and boost revenue.

For others like Telstra, the Netflix losses appear as an opportunity to expand. Testra TV currently has 800,000 subscribers, so adding Fetch TV’s 675,000 subscribers, along with its modern set-top-box, seems like a great way to grow in the streaming market. This Fetch TV deal could allow Telstra to bundle more entertainment media products with SIM plans.

Telstra is already a part-owner of Foxtel, which offers cable television and streaming services. Telstra currently offers customers Foxtel plans for television channels and streaming, so there’s a question about what comes next for this arrangement if its deal with Fetch is approved. 

Keep in mind that Fetch TV currently doesn’t carry Kayo Sports and Binge, but Telstra TV does. Perhaps a deal bringing these popular streaming services to the Fetch TV platform and Telstra TV will happen next – we’ll have to wait and see. After all, Telstra will invest $50m into Fetch, which includes provisions to move Telstra TV subscribers over to the Fetch TV platform. 

Other Telstra investments

While many were puzzled by Telstra’s purchase of Fetch TV, it shouldn’t be a surprise. That’s other recent deals indicate that Telstra seems to be expanding its investment portfolio. 

Here’s a look at some other Telstra investments that seem outside of the norm:

  • Telstra entered a deal to share its network with TPG Telecom
    Telstra recently agreed to share 3,700 of its mobile 4G and 5G networks with TPG Telecom (Vodafone) for the next ten years. The deal could generate between AU$1.6bn and AU1.8bn in revenue during its lifespan. If approved by the ACCC, the deal could also boost TPG Telecom’s coverage to the second largest in Australia, pushing Optus to third place. Naturally, Optus has opposed the deal. 
  • Telstra partnered with OneWeb to compete with Starlink
    Telstra recently announced its partnership with OneWeb, a UK-based satellite Internet Service Provider (ISP). This move could introduce Telstra to the satellite ISP space, competing with Elon Must’s Starlink, which plans to dominate soon.
  • Telstra selling mobile network infrastructure
    Telstra recently sold 49 percent of their Infraco Towers holdings (their network infrastructure holding, which includes mobile towers) for $2.8 billion to a local consortium managed by Morrison & Co.

Final words

Telstra and Vodafone recently announced that the latter would be sharing the former’s significant network coverage. Now, Telstra has paid $50m for Fetch. It’s hard not to see this move by Telstra as an essential strategic step to secure multiple services and an ongoing relationship with their customers, which goes beyond telecommunications services. 

Selling customers multiple services (like TV, broadband, and mobile) makes them less likely to leave. It also offers Telstra the chance to offer bundle discounts which would be especially significant to Australian consumers now, with the cost of living rising and family budgets under pressure, the likes of which we have not seen for some time. 

Well played, Telstra. This step could help Telstra differentiate itself from Vodafone, offering a commercial benefit both to Telstra’s customers and their bottom line.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.