India is critical for Telstra's technology innovations, says CEO & MD Penn

Telstra is looking at co-innovating with Indian startups in emerging technology areas, says CEO Andrew Penn

Australian telecom giant Telstra is betting big on technologies like fifth-generation (5G) mobile network, artificial intelligence, cybersecurity and data sciences, and sees India as playing a key role in building them, says the company’s CEO and MD, Andrew Penn. Dressed in Indian attire -- orange kurta, floral printed waistcoat and blue neck scarf -- Penn, who was in Bengaluru to unveil the company’s Innovation and Capability Centre (ICC), tells Peerzada Abrar that Telstra is also looking at co-innovating with Indian startups in many of these emerging technology areas. Edited excerpts:

How do you view the disruption created in the telecom industry by internet companies and platforms such as WhatsApp, Skype, Apple and Google?

There are some disruptions, but at the same time these new companies are also adding value to the network because this is what is creating the demand. Netflix is really a good example. On the one hand, it has created a disruption in the media industry while in the other hand, it is creating an incredible amount of demand. 25 per cent of all internet traffic in Australia today is (driven by) Netflix. In 2015, Netflix didn't exist in Australia at all. So I think, telecommunications is rapidly becoming the most critical form of infrastructure for every country, business and state. As we move forward in a world which is increasingly connected, it's not only bringing to life innovations which impact our daily lives, but also offers incredible productivity opportunities for companies.

What bets are you making for the future and what role is India going to play in those?

Our strategy is to continue to be at the forefront of telecommunications technology and innovation. We started rolling out 5G in May this year, one of the first three companies in the world to do so. Our strategy is (not only) to be incredibly successful there, but also to build new capabilities in newer areas such as software engineering, artificial intelligence, cybersecurity, data analytics and data science. We need to build more of those skills...so that we don't find ourselves disrupted by new entrants. India is critically important (for) a lot of our technology innovation. The establishment of the innovation and capability centre in Bengaluru is part of that strategy.

India would need an investment of $4.5 trillion till 2040 to improve economic growth and community wellbeing. How do you view the India opportunity to provide these technologies?

Firstly, we're not going to be building telecommunication networks in India. You've got a very sophisticated market which is very competitive. We do own and run the largest subsea cable network within the Asia Pacific region. So, we can connect India through about 200,000 kilometres of fibre going all the way around the world. So whilst we're not investing terrestrially on the ground in India, we are absolutely investing in building our submarine cable network. We have a lot of Indian customers and partners, (like) telcos and enterprises who are doing business here and taking traffic elsewhere around the world. We have a partnership with Bharti (Airtel). What we're really focused on here in this innovation centre which is servicing our core business. Also, Infosys is a significant (service) provider for us. Earlier in the day, we had a meeting with their chairman. We also have a number of Infosys people who are housed in this innovation centre with us.

What are your investment plans to hire and expand operations in India in the next five years?

We've had a presence in India for more than 25 years. Currently, we're at the forefront of rolling out 5G. Getting access to great technology and innovations is very important for us. For many years, we have had very strong partnerships with companies in India from the perspective of providing (building) that technology. But a couple of years ago, one of the things that we felt was to take this to the next level by directly investing in an innovation capability center here. We have a team of around 500 people working here now and we plan to expand it to a couple of thousands in the future.

India’s telecom industry which is saddled with Rs 7 trillion debt is going through huge challenges. Telecom companies have to pay up Rs 92,000 crore to the government as adjusted gross revenue (AGR), and this is expected to hit companies such as Airtel and Vodafone. How do look at these challenges?

I wouldn't be presumptuous enough to give advice to the telecom operators here. But what I would say and I would observe in telecommunications is that it's just an incredibly capital intensive industry. The capex as a percentage of sales have been creeping up over the last 15 years as telcos around the world seek to meet capacity, coverage, speed and resiliency demands. I don't see any of those easing up anytime soon. Our philosophy on it is, to grasp the new technology as soon as it’s available and establish ourselves as a leader in it. There are a lot of discussions happening globally about what's the killer app for 5G or what's the use case for 5G. To me, if I'm looking to the future, and I'm looking at data volumes that are 10 times of what they are today...I need to invest in the best quality telecommunications technology to improve the efficiency of the network.