Telstra Corporation: Reorganizing Strategic Business Units
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Case Code: BSTR123 Case Length: 20 Pages Period: 1995-2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.500 Organization: Telstra Corporation Industry: Telecommunications Countries: Australia Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
Telstra's history dates back to 1901, when the Australian federal (central) government established the Post Master General (PMG) Department to provide domestic telephone, telegraph and postal services in Australia. In 1946, the Overseas Telecommunications Commission (OTC) was set up to cater to the international telecommunications needs of Australian citizens. In 1975, PMG was split, resulting in the creation of separate postal and domestic Telecommunications departments. The telecom arm was named the Australian Telecommunications Commission (ATC), popularly known as Telecom. In the same year, the Telecommunications Act came into existence. According to the Act, the objectives of creating Telecom were to provide, operate and maintain Telecom services in Australia and to optimally cater to the consumers both domestic and business; to enable the government to recoup, at least 50% of the expenditure incurred in installation of infrastructure and maintaining services, and to regularly improve its service and function effectively and economically, while keeping the charges to the customers to the minimum possible extent.
In the late 1980s, changes in the regulatory environment in Australia resulted in a change in the way Telecom was managed. As a result, the Telecom began functioning as a corporate entity, governed by the Board of Directors, unlike the previous Board of Commissioners. The government withdrew its control over Telecom. It was empowered to take business decisions regarding regular affairs without government approval. In the 1990s, there was an increasingly competitive environment in the Telecom industry in Australia. In 1990, the government allowed private telecom operators like Optus2 to compete with Telecom. In July 1991, ATC lost its right as first supplier of a telephone connection to any Australian citizen. Optus commenced operations in 1992. In order to compete effectively in the market, Telecom and OTC merged in February 1992 to create the Australian and Overseas Telecommunications Corporation (AOTC)...
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