Telstra Corporation: Reorganizing Strategic Business Units
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Case Code : BSTR123
Case Length : 20 Pages
Period : 1995-2004
Organization : Telstra Corporation
Pub Date : 2004
Teaching Note :Not Available
Countries : Australia
Industry : Telecommunications
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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)...