TELSTRA - ASIAN MARKET ANALYSIS

Joint Venture Agreement with Telkom Indonesia

TELSTRA

“We want to leverage our domestic strengths to grow our global footprint.The team is focused on refining and enhancing our strategy across Asiaand identifying further opportunities to build our capability in the region”

– Mr. David Thodey, CEO

Growth of Telstra in AsiaAcquired CSL of Hong Kong in 2001, merged New World Mobility in 2005Acquired AutoHome Inc of China in 2008, recently listed in NYSEJoint Venture agreement with TelKom IndonesiaAnd more involvements

TELKOM INDONESIA

Largest telecommunication company in IndonesiaFixed-lineFixed-wireless telephone connectionMobile communications (Telkomsel)Network and interconnection servicesData communication services

Monopoly in the fixed-line market

Market leader in fixed-broadband

51.2% owned by the Indonesian Government

SWOT ANALYSIS

STRENGTH WEAKNESS

• Telstra – Largest broadband internet provider in AUS• Telkom – Dominating the fixed-line and mobile in INA• Telstra – Experience in global business in Asia• Many AUS companies in INA archipelago

• Restrictive rules over telecommunications in INA

OPPORTUNITY THREAT

• FTA under negotiation between AUS and INA• Assist on technical regulations of telecommunications• Substantial growth in mobile subscriber base• Limited use of e-commerce in INA• Telkom’s strategy on IPTV (Telstra Media)• Rule against network/spectrum sharing agreements

• (Limits IndoSat’s agreement with others)

• Government order to open up market to rival IndoSat• Rule against network/spectrum sharing agreements

FIVE FORCES ANALYSIS

Bargaining power of Suppliers [LOW]

• Telstra’s supplier of infrastructure is the joint venture partner

• Mobile sector leader is Telkom’s subsidiary

Threats of New Entrants [LOW] Rivalry [MODERATE] Threats of Substitutes [LOW]

• Access to technology• INA Government regulations• Market share of Telkom

• Vs. IndoSat (Low market share)• Vs. IBM (Multinational Network

Application Services company providing datacentre for Telkom)

• Consumers to stay as-is• No other mode can considerably

substitute network applications

Bargaining power of Buyers [HIGH]

• INA consumers are price-sensitive• 15-19 year old concentrated users• Impacts of social network services

OVERALL ANALYSIS

• Joint Venture Agreement with Telkom Indonesia

• Market leaders of two countries

• Currently negotiating FTA between the two countries may bring positive outcome

• Indonesian government’s position is a key for business’s success

• Deployment of up-to-date technologies necessary

• Reasonable price and features for consumers