Faculty of Higher Education: Telstra Corporation Limited Risk Report

This report provides a comprehensive risk assessment of Telstra Corporation Limited, a major telecommunications company. It begins with an executive summary and an overview of the company, including its governance structure, financial position, and share price fluctuations over a five-year period. The report then analyzes key stakeholders and their impact on the business. A significant portion of the report is dedicated to identifying and evaluating various risks, including operational, market, political, economic, socio-cultural, technological, environmental, and legal risks, using a POESTEL analysis. The report concludes by summarizing the key findings and emphasizing the importance of risk management in achieving Telstra's strategic objectives. The report also compares Telstra's performance with competitors like Hutchinson and TPG, highlighting market dynamics and competitive pressures. The analysis covers financial metrics like debt, profitability, and share capital, along with stakeholder relationships and risk factors that influence the company's operations and future prospects.

RISK REPORT

EXECUTIVE SUMMARY
The report is framed to execute the information related to operational position of Telstra
Corporation Limited with in the sector. Evaluation of organisation’s financial position,
stakeholder analysis, competitor’s analysis in order to identify the potential risk and assessed risk
that impact upon the business image and formation. Information are divided in Major four
sections as Overview of company, key stakeholders, results and conclusion.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
PART 2............................................................................................................................................1
Company overview......................................................................................................................1
PART 3............................................................................................................................................5
Key stakeholders..........................................................................................................................5
PART 4............................................................................................................................................5
Findings or results........................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

PART 2
Company overview
Telstra Corporation Limited is a public company that provides telecommunication services
in Australia (Klettner, Clarke and Boersma, 2014). Company was incorporated on July 1, 1975
and is located in Melbourne, Australia. Organisation provides telecommunication services at
national and international level. The international telecom services are carried out under the Act
of Parliament in August 1946. Material sources were congenitally provided by Amalgamated
Wireless Australia Limited (AWA) in order to maintain all international telecommunication
services. The services are carried out 24*7 in terms of improving the customer experience and it
is increasing by 22% year on year. Company has a strength of thirty-three thousand employees in
total.
Governance structure of Telstra
Andrew Penn is the CEO and John Mullen is the Chairman of Telstra who officially take
the administration control form 1 October 2018. The executive team contains eight member as
Michael Ebeid, Vicki Brady, Nikos Katinakis, Brendon Riley (CEO of Telstra InfraCo), David
Burns, Robyn Denholm, Alex Badenoch, Carmel Mulhern. The ratio of male members in the
executive team is high compared to female members (Team structure of Telstra. 2018).
Debt, Share price, Profitability and size
Financial position of Telstra is also strong in terms of managing the financial challenges
and making new investments (Jia, Munroand and Buckby, 2016). Debt position of company
states that $15,368 million gross and 16,951 million and $1583 million in net derivative assets. It
is analysed that company paid the debt in the year 2018 due to which debt get decreased by
5.2%. $1791 million debts including new issued debts of $718 million. Finance lease was
recorded as $143 million. It is evaluated that the unrealised revaluation affects the debts and
derived the bank overdraft by $7 million. The debt issuance was recorded as $648 in terms of
bond and $70 loans. Debt repayments were as follows -$853 million, -$9 million, short term
commercial loans as -$806 million and repayment of finance leaser of -$120 million.
2018 ($m) 2017 ($m) 2016 ($m) 2015 ($m) 2014 ($m)
Share price ($)3 2.62 4.30 5.56 6.14 5.21
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The above graph indicates towards share price fluctuation of Telstra. As evaluated that
the share price decreased subsequently for last five years (Bottomley, 2016). Source of finance
from common shareholding and issuance of new debts is the major reason that enhanced the
interest expenses for organisation and decreased the profitability of company. This resulted the
decrease in payment of dividend per share and the price per share get decreased.
Profitability 2018 ($m) 2017 ($m) 2016 ($m) 2015 ($m) 2014 ($m)
Net profit 3563 3891 5780 4231 4275
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The profitability analysis of Telstra for last five years done in the above graph that clearly
indicates towards the profitability of organisation (Loomis and Taylor, 2012). Company earned
high profits in 2016 of $5780 million. After increasing in debt financing the dividend pay-out
ratio get decreased by 5.5% which was 26.5% in the year 2018 and 31.0% in the year of 2017.
Size 2018 ($m) 2017 ($m) 2016 ($m) 2015 ($m) 2014 ($m)
Share capital 4428 4421 5167 5198 5719
Size of Telstra is measured on the basis of Share capital in last ffive years. the share get
decreased in reserves and equity (Mayorga and Sidhu, 2012). Foreign curreny is impact is
considering major reason of decreasing in share capital. Share which was hold by employees in
year 2016 and 2015 was acquired in market that resulted deficiency in share capital for the year
2018 and 2017. Net share capital also get decreased in 2018 as -$27 million and -$16 million for
the year 2017. The deficiency get decreased from three years as -$165 million the balance of
reserves on 2017 was -$105 millin. The results clearly shows that due to diminishing position of
researve is becoming the main reason of decreaseing in share capital (Wilken and et. al., 2015).
Share price comparision witin tro companies
The competition level of Telstra is very high while the merger of TPG Telecom limited
and Vodafone Hutchinson boost competition next level (Competitors of Telstra. 2018). This
impacted the market share of Telstra Corporation Limited in terms of gross outputs. It is
expecvted that the antagonistic discount rates were provided by these two and Telstra had to
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force to cut down the rates. The net impact fall upon the revenue per share of Telstra that get
decreased due to high competition (Perumal and Walker, 2014). The value of company merged
of $15 billion with revenure of $6 billion. TPG become the secong prime motionless line
resudential subscriber base with 1.9 million subscribers. On the other side the Vodafone
Hutchinson become the third biggest mobile operator with 6 million subsrciber.
Companies Telstra Hutchinson TPG
2018 2.62 2.9 2.15
2017 4.3 3.2 2.54
2016 5.56 2.8 3.26
2015 6.14 2.7 8.36
The share price fluctuatio among the Telstra, Hutchinson and TPG states that that in 2015
the share price was highly competitive among the TPG and Telstra as $8.36 and $6.14, however
the share price of Hutchinson was very low as $2.7. form 2016 to 2017 the share price of Telsrtra
was high and competiton level was moderate (Nakamura, 2018). After getting merger of two
competitors the market become more competitive for Telstra that resulted the share price down
by $1.78 per share compared to last year. In 2018 the share price of Telstra was $2.62, $2.90 for
Hutchinson and $2.15 for TPG that clearly states the share price fluctuation of company.
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PART 3
Key stakeholders
Stakeholders of company considered as a party that consist of a specific share in the value of
company. These are categorised in major two forms as internal and external stakeholders. Strong
communication network with customers, Australian Communications Media Authority, the chair
person, Executive committee, customers, telecommunication partners, sponsors, subscribers and
market partners are the main stakeholders of Telstra organisation (He, Zha and Li, 2013).
Company produced significant progress on its tactical goal of having the great customer
fulfilment compared to the majority of the sector. During the year, the organization is set to
produce various elements of the 7.2 service quality goal and the executive committee is ready to
achieve 7.3. Since 2009/10, quality of service has enhanced continuously, and Telstra leadership
expects ongoing progress. It will utilise a Net Promoter Score next year to assess the success in
line with our move to a Net Promoter System. It is a basic measure showing the customers '
probability of recommending Telstra.
Understanding the importance of the customer is the key strength of Telstra corporation in order
to maintain stakeholder interest (Fleisher and Bensoussan, 2015). The commitment of executive
committee to the customers build an effective bond between the organisation and customers. The
another aspect also impact highlight the quality service and customer support to the valuable
stakeholder even after facing high competition. Company is maintaining quite healthy
relationships with the sponsors and market partners. Lots of sports activity channels are
associated with the company to whom the telecom services are provided. Customer engagement
and the enlargement process helped in attaining the aim and objectivity of business in more
strategic manner. Telstra become one of the major aspects and the human right, labour that
reflect the better coordination of teams and individuals within the organisation and team.
PART 4
Findings or results
POESTEL analysis
This is one of the effective analysis of analysing the potential risk associated in macro
business environment.
Political Risk
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Political instability and market risk are the key risk factor that may impact the image of business
in various forms (Noe and et. al., 2017). Antitrust law related to telecommunication services,
Direct and indirect factors, risk of invasion and inner governmental framework, provincial
political and legal trends are kind of elements that make the business process more complex and
critical in terms of determining the stable business operation.
Economic Risk
external variables affecting investment and effectiveness in Telecom industry. The connectivity
and tariff rates of using telecom services in Australia. the economic risk also associated to
fluctuating growth rate (Suter II, 2016).
Socio-Cultural Risk
Customer population and based on demographic is the main factor that may impact the business
operations (Li, 2014).
Operational Risk
Trends The day-to-day activity of the organization, movements among the strategic
department and executive committee also interrupt the business process. Sometimes internal
checks also affect the process.
Technological Risk
New transformational system to filter the network is one of the great achievement of
Telstra Corporation that not only optimize the network frequency but also improve the quality of
services (Fenton and Neil, 2012).
Environmental Risk
Internal and external factors including internal governance structure, federal government and
political movements (Covello and Merkhoher, 2013).
Legal Risk
New telecommunication regulation to control the radiation level among the users is one
of the risk factor may impact the corporate and CSR strategies of business and correlate the
business objectivity.
Major risks are identified as follows
S.N. Risks
1. Operational Risk
2. Market risk
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3. Political expenses
4. Management risk
5. Audit Risk
6. Health and safety risk
7. Stakeholder risk
8. Bribery and corruption
9. Exploitation of risk
10. Governmental policies changes
CONCLUSION
The above context summarises the essentiality of risk assessment of organisation in order to
optimise the operations with clear aspects. With the concise report it become convenient to
identify the stakeholder’s position, the analysis of competitors and evaluation of key associated
risk. It is concluded that how the associated risk and management approach helps to attain the
organisational aim and objectives.
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REFERENCES
Books & Journals:
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Jia, J., Munro, L. and Buckby, S., 2016. A finer-grained approach to assessing the
“quality”(“quantity” and “richness”) of risk management disclosures. Managerial
Auditing Journal. 31(8/9). pp.770-803.
Bottomley, S., 2016. The constitutional corporation: Rethinking corporate governance.
Routledge.
Loomis, D. G. and Taylor, L. D. Eds., 2012. The future of the telecommunications industry:
forecasting and demand analysis (Vol. 33). Springer Science & Business Media.
Mayorga, D. M. and Sidhu, B. K., 2012. Corporate disclosures of the major sources of estimation
uncertainties. Australian Accounting Review. 22(1). pp.25-39.
Wilken, R. and et. al., 2015. Framing the NBN: An analysis of newspaper representations.
Communication, Politics & Culture. 47(3). p.55.
Perumal, S. and Walker, R., 2014. Challenges faced by communication providers in meeting
regulatory requirements: Analysis of equivalence of input and functional separation.
Nakamura, B. M., 2018. Is Olympic Ambush Marketing Here to Stay: Examining the Issues
Surrounding Ambush Marketing as They Relate to Olympic Sponsors, Athletes, and
Other Stakeholders. Ariz. J. Int'l & Comp. L.. 35. p.499.
He, W., Zha, S. and Li, L., 2013. Social media competitive analysis and text mining: A case
study in the pizza industry. International Journal of Information Management. 33(3).
pp.464-472.
Fleisher, C. S. and Bensoussan, B. E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Noe, R. A. and et. al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education
Suter II, G.W., 2016. Ecological risk assessment. CRC press.
Li, W., 2014. Risk assessment of power systems: models, methods, and applications. John Wiley
& Sons.
Fenton, N. and Neil, M., 2012. Risk assessment and decision analysis with Bayesian networks.
Crc Press.
Covello, V.T. and Merkhoher, M.W., 2013. Risk assessment methods: approaches for assessing
Standards Australia International Limited, (2009), AS/NZS ISO 31000:2009, Risk management -
Principles and guidelines, Standards Australia International, Sydney. 658.155 RIS
World Economic Forum. (2019). Global risks 2019. 14TH Edition:
(Political/Sociological/Environmental/T echnological/Economic)
http://www3.weforum.org/docs/WEF_Global_Risks_Report_2019.pdf
Online
Team structure of Telstra. 2018. [online]. Available Through:
<https://www.telstra.com.au/aboutus/media/media-releases/New-organisational-structure-and-
leadership-team-for-Telstra>.
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