SOMETIME in the next couple of weeks, Sensis will for the first time hold its own investor briefing away from a typical Telstra event.
Chief executive Bruce Akhurst is expected to unveil a transformation agenda for the directories business, which reported an 18 per cent drop in revenue at last week’s Telstra results.
His agenda will be underpinned by the experience of British directories veteran Paul Plant, who spent more than two decades at Yell UK and was responsible for championing the digital transformation of that business.
When Telstra’s strategy head Geoff Avard invited Plant to Australia last July, it was about curbing the sudden declines in the Sydney Yellow Pages directory. It didn’t take long before the scope of his task was widened to an overhaul of the entire business.
When Plant first arrived, Sensis’s print offerings were still delivering fat profit margins, defying global trends. Many inside the business felt these margins and the strong sales revenue would continue for some time to come, meaning there was no urgency to adapt to digital demand.
However, the haemorrhaging of print revenues in Sensis in the past half has been severe, falling by 18 per cent. Indeed, if Telstra had not chosen to adjust its first-half numbers to recognise revenue from Sydney Yellow Pages, Sensis group sales revenue would have shown a decline of 17.8 per cent. Total income for Sensis in the half was just $696 million. Hard to believe this is the same division former Telstra boss Sol Trujillo had high hopes for, predicting just three years ago that it could reach annual revenues of $3 billion.
Telstra explained it as a “structural shift from advertisers away from print directories” and noted it was a trend seen in other markets.
Sensis still generates almost two-thirds of its revenues from print — much higher than a lot of its global peers. But as more and more customers switch from the big yellow book to online searches, the imperative is on for Sensis to diversify away from the printed tome that has underpinned its earnings for so long.
There are two major milestones that are central to the success of Sensis’s new strategy: growth in absolute customer numbers and significantly increasing its digital customer base by migrating them from the print space. The Google resale deal announced recently is an example of the “digital landgrab” Sensis is plotting. Deals with Facebook and Twitter are also being worked on.
In his address to staff at last week’s Sensis sales conference in Melbourne, Plant was optimistic about Sensis and its directories peers. Although Sensis has lagged its British and US peers in implementing a digital strategy of substance, at least it recognises it needs to change.
However, analysts have warned it may be too little, too late. Morgan Stanley’s Mark Blackwell has noted the declines Sensis is experiencing may be difficult or impossible to reverse even if the group executes well on a digital strategy.
Meanwhile, there was larger than usual volume in Telstra again yesterday with five major lines traded, representing $81.5m worth of shares. The block trades suggest the Future Fund is back to its old tricks and selling down. Just two weeks ago it revealed it had shed 1.04 per cent of its stake to 6.76 per cent. Of the lines crossed yesterday, four were at $2.97 a share and one at $2.96.
Nabila Ahmed – February 18, 2011 – 12:00AM
theaustralian.com.au/business/opinion/ceo-bruce-akhurst-tipped-to-unveil-transformation-agenda-for-the-directories-business/story-e6frg9if-1226007820060
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