Telstra to restructure into three entities

Telstra has announced it will restructure into three separate businesses as part of its ongoing T22 strategy.

The telco will operate as InfraCo Fixed, InfraCo Towers and a new business called “ServeCo” starting December 2021.

InfraCo Fixed is set to own and operate Telstra’s passive or physical infrastructure assets like fibre, ducts, data centres, subsea cables and exchanges. InfraCo Towers would own Telstra’s tower assets, which the company said it would look into “monetise” over time, citing strong demand for the infrastructure.

ServeCo will serve as Telstra’s customer-facing side, owning the active parts of the telco’s network, including the radio access network and spectrum assets.

In an ASX announcement released today, chief executive Andrew Penn said the restructure would allow Telstra to “take advantage of potential monetisation opportunities“ for its infrastructure assets.

“The proposed restructure is one of the most significant in Telstra’s history and the largest corporate change since privatisation. It will unlock value in the company, improve the returns from the company’s assets and create further optionality for the future,” Penn said.

“The challenges and disruptions of the last 6-12 months have reinforced the increasing value of infrastructure assets globally; the importance of the digital economy, not only to business but to the whole of Australia and its economic recovery; and the dependence of the digital economy on telecommunications as its platform.

“Our proposed new corporate structure reflects this new world and will help us support the foundation for it – one that is in the interests of our shareholders, our employees, our customers, and ultimately one that benefits the country overall.”

Telstra established InfraCo in 2018 upon the announcement of the T22 strategy to gauge the value of its infrastructure assets and potentially sell the assets off following the completion of the NBN rollout.

“With Telstra InfraCo now a fully operational stand-alone business unit and the nbn roll out effectively complete, now is the time to take the next step in realising our T22 ambitions, including monetisation of our infrastructure assets where appropriate,” Penn said.

“The proposed restructure of our organisation provides us the optionality and opportunity to better realise the value of our infrastructure assets and, in an evolving and competitive market, helps us focus on continuing to provide the best experience to our customers.

“We have created a set of key principles for the Intercompany Agreements between InfraCo and ServeCo that supports strong and sustainable earnings for both entities. These agreements are designed to maximise value for Telstra shareholders.