Telstra raises mobile investment to A$5 bn to fight off rival Optus

Australian telecommunications giant Telstra Corp Ltd has raised its capital spending by A$500 million to over A$5 billion to improve its Australian mobile network in a continuing battle with arch rival Singtel Optus Pty Ltd, controlled by Singapore's Singtel Group.

The company's new chief executive Andy Penn said the $5 billion will be spent over three years to 2017.

In his first major public appearance since taking over the reins of the company in May from David Thodey, Penn said, ''During my time as chief executive I am committed to make sure we have the best networks in Australia with the broadest coverage."

"We've been investing at the billion dollar-plus level in our mobile network for a very long time and its what we believe is the right level of investment to continue to expand our network," he added.

Telstra plans to increase its total capex investments to 15 per cent of sales for the next two years providing more than A$500 million for mobiles.

"In total, over three years to June 2017, we expect to have invested more than $5 billion into Telstra's leading mobile network," Penn said.

Telstra's move could counter Optus' plans to significantly increase investment in its network to nearly A$1.8 billion from A$1.3 billion over the next year aimed at derailing Telstra's dominance in the mobile market.

Telstra is the leader in the Australian mobile market with over 16 million customers, while Optus serves over 10 million, followed by Vodafone-Hutchison which has more than 5 million subscribers.

Telstra intends to add another 750 new mobile base stations and expand its 4G coverage to 99 per cent of the Australian population.

The investment is aimed at handling the excessive video traffic linked to the arrival of streaming on demand videos.

According to analysts, although the $5 billion figure seemingly doubles the spending for the next two years, it would include payments such as spectrum auction fees and $126 million earmarked for the regional black spot programme, and could effectively represent a 25-per cent increase on Telstra's normal spend on mobile networks.

The Australian telecom giant is ambitious of becoming a global technology company with involvement in everything from e-Health to cloud data storage.

"Telstra is no longer simply a phone company - technology pervades everything we do. Our vision, my vision, is that we now take this to the next level and become truly world class," Penn said

Increased spending plans by operators on new mobile infrastructure are expected to improve the quality of mobile and internet services in the country. Vodafone Hutchison has also spent $3 billion in the past three years on improving its mobile network.