Telstra half-day outage cost economy at least $596M – report

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(Source: Alisha Arif/Alamy Stock Photo)

Telstra is still dealing with the recriminations from its 12-hour network crash in July due to a network timer fault.

Company chiefs faced a grilling at their AGM Tuesday, while at the same time a new study estimates the outage cost the economy A$854 million (US$596 million).

One Telstra shareholder complained that chairman Craig Dunn didn't step up to defend the company in the absence of CEO Vicki Brady, who was on leave.

He said CFO Michael Ackland looked like "a fish out of water" as he fronted the media to explain the outage to an angry public. He also expressed concern about the cost of the outage in lost dividend payments and reputational impact.

Board member Maxine Brenner also came under fire, with corporate governance group Institutional Shareholder Services arguing she should not be a member of any board because of her record at Telstra and previously at airline Qantas.

Brenner received an unusually strong protest vote of 11.5% of proxies but retained her seat.

A report by FTI Consulting, commissioned by consumer group ACANN, showed that the consequences of the failure of the biggest telco network are still being calculated.

Significant impacts

FTI said the net cost to the economy in value-added terms was A$552 million ($385 million) in lost GDP, with another A$302 million ($211 million) in direct economic losses to business and consumers.

"This study demonstrates a large-scale mobile outage can have significant impacts across the economy," it said, noting that its conclusions were conservative because it still lacked data on some sectors.

Meanwhile, data from the Australian Tax Office (ATO) has reinforced the industry view that the repeated Optus failures arise out of the investment and tax policies of its parent.

The ATO revealed that Optus paid no taxes last financial year and has paid virtually no taxes for six years. According to Guardian Australia reporting, the company regularly paid taxes up until 2020.

One factor is Optus' aggressive approach to depreciation and amortization (D&A).

In accounting terms, D&A measures the ageing of capital equipment – a significant metric for a business with billions of dollars of deployed assets.

But filings from Optus' 100% owner Singtel show that it calculates D&A differently not only from its competitors but also from its parent.

Optus has marked down the value of its equipment by just under 22% in each of the past two financial years. That compares with Singtel Singapore's rate of 16-17%, Telstra's 17-19% and StarHub's 10% over the same period.

That difference may sound small, but it means Optus' earnings before interest (EBIT) – that is, after accounting for D&A – totaled A$550 million ($384 million) on revenue of A$8.35 billion ($5.83 billion) in 2024/25, a 6.6% margin. By comparison, Telstra and Singtel reported EBIT margins of 17.4% and 21.6% respectively.

Optus' network went down for 13 hours on September 18 last year, taking out the emergency call system and reportedly causing the death of four people.

That followed another major outage in 2023, which cost the company A$40 million ($377 million) and led to the resignation of CEO Kelly Bayer Rosmarin. It has also experienced multiple smaller outages, the latest just two months ago.

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