Kelly Bayer Rosmarin was appointed CEO of Optus and Consumer Australia on 1 April 2020. Prior to joining Optus, Kelly spent 14 years with Commonwealth Bank of Australia (CBA) where she held several senior positions. Alec and Bryce talk to her about Optus’ future, how Covid and its restrictions have impacted the business, the competitive challenges of the telecommunications industry and her thoughts on leadership and workplace culture.
If you want to let Alec or Bryce know what you think of an episode, write to them here.
Want more Equity Mates? Join the Equity Mates Investing Podcast Facebook Discussion Group, sign up to our Thought Starters mailing list or check out our Youtube channel. To make sure you don’t miss anything new in the Equity Mates world – sign up to our email list here.
In the spirit of reconciliation, Equity Mates Media and the hosts of Equity Mates Investing Podcast acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people today.
Equity Mates Investing Podcast is a product of Equity Mates Media.
All information in this podcast is for education and entertainment purposes only. Equity Mates gives listeners access to information and educational content provided by a range of financial services professionals. It is not intended as a substitute for professional finance, legal or tax advice.
The hosts of Equity Mates Investing Podcast are not financial professionals and are not aware of your personal financial circumstances. Equity Mates Media does not operate under an Australian financial services licence and relies on the exemption available under the Corporations Act 2001 (Cth) in respect of any information or advice given.
Before making any financial decisions you should read the Product Disclosure Statement and, if necessary, consult a licensed financial professional.
Do not take financial advice from a podcast or video.
For more information head to the disclaimer page on the Equity Mates website where you can find ASIC resources and find a registered financial professional near you.
Equity Mates is part of the Acast Creator Network.
Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I'm joined by my equity buddy Ren. How are you going?
Alec: [00:00:30] I'm very good. Bryce. I'm very excited for this episode. I'm loving this CEO series that we're doing because we get to speak to some of the biggest and best CEOs in Australia. But what's more, we get to talk about companies that many of us are familiar with, but really scratch beneath the surface and understand what's going on with some of those really well-known businesses. And today is no different.
Bryce: [00:00:51] And it is our absolute pleasure to welcome Kelly Bayer Rosmarin, the CEO of Optus, to Equity Mates. Kelly, welcome.
Kelly Bayer Rosmarin: [00:00:58] Thank you so much. I really appreciate you having me on the show.
Alec: [00:01:02] So, Kelly, we always love to start these CEOs series interviews by having the company leader describe their company in their own words. So to kick us off today, what is Optus?
Kelly Bayer Rosmarin: [00:01:13] What is Optus? It's actually not a question anyone's asked me before, and maybe that's because we're such a, well, well-known brand. But I would say Optus traditionally is a telecommunications company delivering voice data, fixed home internet services and more recently, some content and other applications. But on another level, what Optus really is is it's an enabler of the digital economy and an enabler of customer experience, because never before have people relied more on their connectivity to do what they do every day. I think it's really a great position to be in where the service you provide is essential, necessary, you valued and at almost all other players in the economy are building on.
Bryce: [00:02:05] So there's no doubt that there's some pretty well-known names in the competitive landscape in telcos here in Australia, and we'll get into a bit of that in a minute. But but how would you say that you're differentiating yourself from other telcos?
Kelly Bayer Rosmarin: [00:02:19] Actually, the whole telco industry for a long time has been competing in a very traditional way on Dollars per gigabit and coverage. And of course, that's something that we need to continue to compete on, and we are. But I think at Optus, we're actually taking an approach that really has thought through what differentiation means. And so what we've done is we've set a bold vision that we want to be Australia's most loved everyday brand. We've lost being customer relationships, and for us to achieve that, we have tried to reimagine what connectivity should look like in the future. And that led us to a concept which we've called the Optus Living Network, which is really a significant shift in how people think of network. So if I contrast, the traditional approach is to think about access to network in a commodity like way. You pay a monthly amount, we get a certain data allowance and number of calls and texts and things included, and you don't think about it at all, except when you have to pay your bills. Our approach with the living network is to say, why does the experience have to be so uniform? Why does it have to be set and forget in the background? Why can't the network adapt to what you need? So some days you might need to consume more data because you have an important conference call or you want to binge watch your favourite show. Some days you need the network to be faster. Some day you may need a digital detox to just shut off from the world. But with that concept of Optus, that network, we're trying to create a network that actually comes alive for our customers and can be controlled for their individual needs from within hours. So just so people can understand what what we're talking about. So one of the first ones that we've launched was donate your data, which lets you go into our app and with a tap of a button, you can donate any of your unused data to children across Australia who otherwise would not have access to the internet. It's a great opportunity for our customers to use their data for something else and for something that really goes good in the world and is in enable children who are less fortunate. Then we introduced our unlimited data day, which says that for $5, customers can choose to have unlimited data for 24 hours. And that might be they're trying to zoom into an overseas wedding, and they don't want to think about how long they're spending online. Or it could be that they're sick at home and just want to watch the entire Game of Thrones back-to-back whatever it is, and they don't need to feel worried about being throttled or overcharged. And then one of the most recent ones we launched, sidekick enables customers to when they feel they need to be checked up on. And this is something that was actually an insight from many of the women who work at a. And sometimes if you're walking home alone at night or you're in some situation, you sometimes think, Oh, it would be nice if somebody else knew that I was here and that I made it home in one piece. And so you can actually nominate some contacts within the app, trusted contact and set a timer. And if you don't check in by the time the timer runs out, it will notify those contacts to check up on you. So those are just examples of three of these sort of living network features. We have a whole host of them. And the idea is that we make the network more and more useful and relevant in the moments that matter to our customers.
Alec: [00:05:48] Well, Kelly, speaking of zooming in to friends weddings, Bryce and I have to do that next Friday for a friend in New York, shout out to Elton. So and maybe we're going to need to pay that five dollars and get the unlimited data. I just want to touch on the the most loved because I guess that's a big statement and especially from the telco industry, where traditionally that perhaps hasn't been a lot of love between customers and the providers. So why is most loved rather than, you know, most reliable or most trusted the metric that Optus is chasing?
Kelly Bayer Rosmarin: [00:06:22] It's also a fantastic question with a very controversial word, and as you say, it's not a word. You hear a lot in business. It's certainly not a word that you would associate with telcos. And I think this is something that if you if you think about our industry, we should be we should be loud. Because what I said earlier, we are really the enabler of experience. People love their phones, but they take for granted that what makes the phone useful is this connectivity. Without it, the phone wouldn't be nearly as useful as it is. So why is it that they don't love the underlying connectivity that makes it all happen? And for us, love was a very strong word because it also guides how everybody in the company acts towards our customers. It's a very big difference between being loved and being tolerated or trusted. And so it helps that people understand how we want them to treat our customers, how we want to design experiences. And so often for me as the CEO or I have to say to people is, is that one of the most loved experience looks like? Is that how you would treat a customer if they wanted to love Optus? And so if people have that mindset, it makes a huge difference in the quality of interaction that we provide to our customers and the quality of experience we design when we're working on all of our innovation. And it really is making a big difference. I mean, since we've introduced this vision and all these different things in the last 18 months, our end here is the highest it's ever been. Our complaints are the lowest that they've ever been, and our employee engagement is the highest that it's ever been. So I think it's really making a big difference for people to have that aspiration of being a loved brand. And I'm confident that if we keep continuing on this trajectory, that we could get there.
Bryce: [00:08:11] Yeah, I love this idea of flex, a network that flexes with people's needs. I think one thing that has irritated me with my telco, at least, is international travel and being able to use the phone as freely as we do here domestically. So I'm not sure what Optus are doing in that space. But with borders about to open, it feels like later this year into next year and a lot of people jetting off overseas. It's an interesting space. If you think about what is connexion look like for the modern person and internationally, certainly one of them.
Kelly Bayer Rosmarin: [00:08:43] Exactly, exactly. And one of our features is the Travel Pass or the Road Pass, which will let people have a lot more control over what they want when they're travelling, and they can do it standard on a daily basis. They can set it in the background and have a default if they want to. And so again, it's all about putting the customer in control of how they want to access their connectivity, making it work for them. Yeah.
Bryce: [00:09:09] So Kelly, we've spoken to a lot of business leaders recently and have been fascinated with the impacts that Covid has had on their business and the restrictions, and for some, it's more severe than others. So how has Covid and their current restrictions impacted Optus?
Kelly Bayer Rosmarin: [00:09:26] It's a huge question because the range of impacts is so big, so I might tackle it at a couple of levels. I mean, obviously there are business impacts, there are people and productivity impacts. From a business impact perspective. I think the results have been a little bit counterintuitive. I think a lot of people may say, Oh, Covid must mean your business is booming because everybody's online. Everybody's using their connectivity more than ever used it before. The reality is the way that our market has evolved with this traditional commodity structure means that already most people have more data than they can consume, and text and talk is already free at home. Internet plans are unlimited. So in that context, people are consuming more and more, which cost us. As we maintain the network and have to constantly invest to add capacity, but there's no extra revenue that comes from all this increased usage because of the way the market here has evolved. So costs have gone up and revenue has stayed constant. However, there's also streams of revenue that we've lost. You spoke about roaming and travelling overseas. That was actually a very good profit contributor when you have plans that mostly have token checks domestically being completely free. So we've lost a huge stream of revenue when it comes to roaming for our customers. We've also then lost a huge number of customers that we normally have in any given year because we've had a very successful business in selling prepaid sims to travellers people coming into Australia. We've also had a very good track record with students who are studying in Australia or immigrants coming in and all those cool. The customers have been eliminated from the market opportunity. So there's also a challenge on that front. And so from a business perspective, the impact of COVID have been harsh on the whole sector, and I think everybody has reduced in their profitability. And of course, costs also went up in terms of investing in more cleaning, having to introduce different options like click and collect in the stores and often having to maintain our employment with our people, even when we had periods of lockdowns in various states and they couldn't be working and fully productive. So that's the business impact side on the people side. Of course, there has been a lot of different impacts and we've had to adapt to how people work from multiple places. Our workforce is very mixed. We have a little bit of everything. We have retail stores, we have technicians who are out 16 fibres in the ground and climbing up towers to install equipment. We have people going into people's homes to make sure their NBN is working. We have all kinds of software developers who work in office environments. We have call centres all over the world, including in Australia. And so there have been enormous implications for our people, and we've been subjected to different restrictions and decisions made in different parts of the world and the country. So we've had to be incredibly agile and creative in how we've adapted to the different challenges. And I'll just give you an idea of some of the scope of the challenges. I mean, last year we had simultaneous lockdowns in parts of Australia, as well as the Philippines and India. And even though we have a diversity of call centre locations, it happened that almost overnight we lost 90 per cent of our call centre capacity. When I say that, I mean, I I'd say that to people and you know, you can see they're thinking, well, the executive team just go in on the weekend and help on because we get about 400000 calls per week. So it's a lot of cold. You need to have some capacity to handle that. And especially when people are in lockdown and relying on our services more, they have a very low tolerance for things not working. We had to be very creative. We had a pivot. And what we learnt about doing is we pivoted all of our in-store staff. So we have more than a thousand people working in our stores, and we pivoted all those staff to be able to start answering call centre scale questions that were coming in via the messaging app that we had implemented. And so they could, in their spare time from the stores, be answering customers questions and we were able to train all those people in what would normally take us a six week programme. We reduced that into something like two days. We also had to be very creative and we started hiring people from other industries. You know, talking to Qantas to Virgin Australia, to some of the travel companies who had been letting go while standing down their staff. We managed to very quickly hire more people and again train them very quickly. We really had a pivot to be primarily utilising a messaging platform, training people really quickly and finding a way to meet our customers expectations despite the loss of so much of our capacity. And I was really proud of how the team pivoted through that. And then we had to pivot into how to get people back into the office, and we came up with this idea of blended ways of working. How do we get the best out of what we've learnt about working from home and the best out of what we've learnt about being together in the office? And we've created guides for our people on how to run blended meetings and what blended working looks like for this, and it was really well received by our people. So lots of pivot, lots of challenges adapting to different states of lockdown in different states. And that's had a big implication challenging. But I think it's also made us very. Very able to adapt very quick on our feet.
Alec: [00:15:17] So, Kelly, what I what I hear in that answer and what we've heard from a lot of business leaders that have, you know, had similar responses to Covid is just how entrepreneurial a lot of big Australian businesses have had to be. You know, they've had to pivot business models, they've had to change people's roles, they've had to disrupt operating models and really move quickly. And, you know, come up with new ways of doing things in the face of this unprecedented pandemic. And I guess the question that comes out of that is, you know, if you look beyond Covid, what changes do you think are going to last beyond Covid and has the business model or the operating model or the way you build teams or anything? Has anything changed permanently throughout this kind of period?
Kelly Bayer Rosmarin: [00:16:03] I think maybe last year, some people would say that it's a little bit early to call, but I think by this point, there's a couple of things that, at least for us, have changed. I do think our blended ways of working here to stay. For us, blended means we want people to be in the office together at some point in the week, and we also recognise that there's some benefits to people having time at home to get their individual work done. I think that that there's a very nice blended path that is actually going to combine the best of both worlds. We definitely believe that blended is the way to go. You know, a lot of people, when they talk about the benefits of working from home, focussed exclusively on personal productivity, and we try to focus not only on personal productivity, but also on organisational productivity. How do you maximise learning, relationship building, innovation, collaboration, all these other things that are helped by face to face? And we've also learnt that a lot of people don't just work for work sake. They're not just there to get their work done. They like an exchange of ideas with colleagues, social interaction, the validation they get from working on something together and celebrating successes, et cetera. So I do think blended ways of working will be here to stay. The other thing that for us to stay is a big shift that we made during this whole Covid period, which is that because of what I described earlier about how we have to adapt to the call centre issues, we learnt up training a lot of people on new things. And so almost everybody, even those who were working in call centres, have learnt new skills and topics and the way we were organised before in a very traditional way within different departments in our call centre. You know, this was the mobile department and this was the big scope department and this is the billing department and everyone was very specialised in what questions they could answer. And one of the things I remember going into the work and talking to our people who'd all been disrupted during during that period and what I saw was actually a form of sort of adrenaline and motivation people who were learning something new and who believed in themselves now that they could take on more and learn more skills. And I remember thinking it would be such a pity when the immediacy of the crisis and the capacity come back for us to just go back to their old jobs and they were all siloed departments. And so we actually introduced a completely new concept for our call centres called Teams of Experts, which is a much more generalist model. And the idea is that we actually have a team that have all the skills needed to satisfy what a customer wants, doesn't have to pass the call from department to department so they can satisfy what the customer wants in a single call. And actually, we have each community, the tech community, they adopt the region so that if you the tech community looking after Melbourne and when anybody calls from Melbourne, they always go to the same community and they build up an understanding and a clear view of how the network performing and all these things related to that particular community. And we think that that creates a much better customer experience and a much more loved relationship with our customers. And so that is a permanent shift that we have been making since the pandemic started and one that's very positive. And I think here to stay.
Bryce: [00:19:35] When we think about the industry and the competitive landscape, you know, there's there's sort of three big things that we see in the telco industry that's changing competition 5G and towers. So we want to step through each of those with you and get your thoughts on on how each of those are impacting Optus. But before we do, we'll just take a quick break to hear from our sponsors. So, Kelly, as I said, changing competition, 5G and towers, all sort of really big impacts on the telco industry at the moment, and we want to get your thoughts on all three. So let's start with changing competition. There's no doubt that NBN has been incredibly disruptive. Vodafone and Take Edge have merged. And then there's the rise of the end the nose, which we'll discuss in a second. How do you view the changing landscape in terms of competition? And I think how do you protect your margins?
Kelly Bayer Rosmarin: [00:20:30] From my perspective, the most important thing for us to achieve our vision is to be focussed on the customer and what the customer wants. So competition is relevant, but it's not the most important factor that we need to consider. The most important factor is what is it that customers really want and need? And how do we meet and exceed those expectations and create that loved lasting relationship? We like to shorten it to lasting love. How do we create lasting love with our customers? And to be honest, I don't think that our combat competitors in the traditional telco industry is where we should be looking for answers and ideas for that. I think we've got a lot to learn from other industries and a lot to learn from getting close to our customers. So the first consideration we will always have is what would be great for the customer here, what would create lasting love for the customer? And that is really what's driving all about innovation differentiation. It's allowing us to do things that no telco anywhere else in the world is doing. And so I'm really proud of our approach on that front. However, we don't exist in a vacuum, so we do need to understand what's happening in our markets and with our competition. And as you pointed out, there has been a big factor in the NBN's creation in this market, and there's clearly been a value transfer between the authorities, retail service providers, the traditional telcos and the NBN. That's pretty clear to see. I think that has created some tension in the market and challenges on margins, and I think it's been well covered. There's a lot of people who who have been critical of how that's being done. I think if you have a look at comments that I've made about NBN, I've been very consistent again and being the customer champion in the market. And what I think needs to happen is much greater focus from NBN on customer experience and customer outcomes. I think that one of the reasons that they already struggled to be profitable on NBN is that there is not a strong enough customer experience for customers who want NBN services. And what I mean by that is that sometimes technicians don't show up for week or they don't show up at the time that they'll say or the line underperform or don't give the speeds that they should. And in all those instances which are under NBN's control, the customer so called in to the retail service provider, the RC. And we have to take all those calls and a lot of cost to try and work around what is fundamentally not the best experience. I think it would be an improvement for the whole industry. Our economics and of course, the customer experience the NBN increased their focus on improving their service. That is the one thing that I've been trying to work with NBN on, and we think NBN's a good thing for the country in general. But I'd really like to see much more focus on my experience when it comes to our traditional competitors, whether it's Telstra, whether it's TPG merged with Vodafone. I think we still feel we need to be strong on the traditional competitive metrics. So giving people good value for money when it comes to Dollars per gig and giving them great coverage across Australia. And to that end, Optus invested more than seven billion in the last five years in trying to catch up their coverage to Telstra, and we now have a ninety eight point five per cent of the population. So unless you're in a pretty, pretty remote place, we have great coverage for our customers and good quality coverage. So we feel like we on the traditional telco metrics are doing really well relative to the traditional incumbents and really well and with much better coverage than our next competitor. And then there's the MVNO in the market, as you pointed out, and the MVNO tends to be the tier two player to compete largely on price. It's a growing part of the market. I think our response there is is we actually acquired a mason who is the largest MVNO in the market, and we think that there are scale player. They have a good online experience. We think that we need to be very competitive in that MVNO is here to speak for those customers who really just want something that. No girls, it's something they can access really easily without all the added benefits and extra experience that you get from going with the obvious brand.
Bryce: [00:25:09] So Kelly, just for those at home who are unsure what MVNO stands for. Are you able to just briefly provide what the difference is between an MVNO and perhaps Optus and Telstra?
Kelly Bayer Rosmarin: [00:25:19] Yes. So an immuno is a company that doesn't actually have a network. They don't invest in putting the fibre in the ground, but showers the radio equipment. They just do a deal with one of the the telcos to provide them with that service and resell it onto their customers. Mm hmm.
Bryce: [00:25:37] There's no doubt that there seems to be a new MVNO popping up almost every week.
Alec: [00:25:41] Just wait until Equity Mates Mobile was launched.
Kelly Bayer Rosmarin: [00:25:44] Yeah, I must say this market has more MVNO than any other market I've seen.
Bryce: [00:25:49] Oh yeah. Why is that?
Kelly Bayer Rosmarin: [00:25:51] To be honest, I think it's because we live in a country the size of a continent with quite a modest population, and the investment in creating the connectivity that you need in Australia is extremely high. And to recuperate that you need as much volume going through your networks as possible. So with three operators limited population and historic dominance by the largest player, I think everybody has been forced to try and get customers any way that they can.
Alec: [00:26:21] Well, Kelly, you said at the start of that answer, it was a big question and it was, I think we could have done a podcast on each of those topics NBN changing competitive landscape and the NBN Co's. But I think you I think you managed to touch on all of them that we want to move to what is perhaps the most talked about part of the telco industry. And it's been talked about for a while, and we're excited to get your thoughts on that. And it's not 5G. We've been hearing about, you know, how how it's going to change, change everything for a couple of years now, and all three of the major Australian telcos are rolling out 5G networks. You know, for four Bryce and my benefit is, is 5G going to going to live up to the hype? And I guess from your perspective for Optus business, how do you think about 5G and how do you think it's going to, I guess, change or evolve Optus as a business?
Kelly Bayer Rosmarin: [00:27:09] I think 5G is one of those technologies that not many people understand what it is. 5G is complicated in that not all 5G is created equal. So just because you see 5G on your phone doesn't mean that you're going to have any different experience from what you had with 4G, because 5G can be quite variable. And we've seen this in the Australian market, where different the different telcos are rolling out a different flavour of 5G. And for example, one operator is rolling out 5G over a low band frequency, which means that five, there's not that much difference from their 4G at all. You know, as 5G matures, the promise of 5G is that it will be Super Bowl enabled, much greater capacity in terms of the data that can be consumed and low latency, which means that there's very little lag between wanting to do something and something actually occurring. And those can be very useful attributes in situations where those are valued and there are a number of great use cases, particularly for businesses in their connectivity, where the ultra low latency and the speed make a big difference for Optus. We've been, as usual, very customer centric in the approach that we've taken to 5G, and our view was that we need a roll out of 5G that is valuable to our customer base. And if we want 5G to be used as a vehicle for the industry to improve its margins, which it does need to do, we should offer something of value to our customers if we want people to contribute more for their service. We should give them more. And so we set about the task of rolling out Australia's fastest 5G, and that is what we have been doing and is at least a few independent benchmarks, such as requirements that show that we are the fastest 5G in Australia. We were much later to charge customers more for our plan, and that's good. We just stuck with the principle of if we want to be a loved brand and we would only ask our customers to pay us more if we added more value. And so our 5G now is very far off. It is much faster than 4G, actually one of the independent reports. So the uplift that you get over 4G and for us, it's very considerable. So you do get a big uplift. And so from a consumer perspective, what that means is if you're downloading a movie or looking at large files or something like that, it's going to be lightning fast on Optus 5G. And by the way, 5G is not just for the mobile phone. We also get the first in Australia to launch 5G at home, which is our equivalent product for home internet to the NBN, but very, very fast. And it's one of our highest impact products and our customers really love them. So as we keep rolling out. Our coverage and our coverage gets more and more we'll be bringing Australia's fastest 5G to more and more customers across Australia. But then all the magic as 5G matures and when I say mature, they can. Not a lot of people understand. You also need the chipset in the devices like the phones to mature as well. You can start activating more features, such as slicing, which enables customers to then control the particular slice of connectivity that they get from us, which is very much in line with where we've been going with our living network concept. And so we think that will be enabled to a different degree when we get to a mature 5G where you can actually get a slice, a unique slice of connectivity to each individual customer. So will 5G live up to the hype? I think the hype has been ahead of where the technology maturity is, but over the full cycle of a generation of technology. I think there will be some killer applications that emerge, and there will certainly be a new standard set in the level of experience that customers have of the speed and latency on the network.
Alec: [00:31:09] So Kelly, I just want to pick up on one thing you said there and this is more just for me to try and get my head around 5G. You mentioned that you're rolling out 5G at home and it's going to have speeds comparable to NBN is the investment that telcos are making in 5G. Is that going to, I guess, go head to head and potentially negate a lot of the investment that's been made in NBN? Are we just going to move straight past NBN and just go to 5G at home?
Kelly Bayer Rosmarin: [00:31:35] 5G home is an alternative to NBN, and you're right, I shouldn't have said comparable in a lot of instances, the 5G speed is faster and more efficient. Okay, I'm sorry that was my bad because NBN is actually quite variable because of the mixed technology solution that NBN rolled out. There are a number of households where they can't even get 50 megabits per second or can get 50, but can't get 100 and 5G out 5G at home. We have two offerings, one that speeds at 100 megabits per second and one that's unlimited, and most customers get 200 megabits per second on top. So sorry, that is my correction equivalent service NBN, but it is off that. Now, having said that, I still believe there's a strong place for NBN in the market and 5G while it's really fast and the faster you want it, the shorter the distance that the 5G coverage goes. And so what I why I'm mentioning that is because you can get very fast 5G. But to blanket the whole country, a country the size of Australia with that superfast 5G is incredibly, incredibly expensive and time consuming because you would need a different level of density of 5G towers to be able to do that. So we don't think that that's going to be a practical alternative to NBN, rather a complementary alternative in certain locations, and there will still be a strong role for NBN. And by the way, also NBN will have to invest in the quality of its solution over time to improve their speeds and which parts of the country they cover well. So as with anything, a little bit of competition is a really good thing, and I'm hoping that 5G is enough of a competitor to NBN to help them get behind this agenda of providing better experience for customers. But I don't think that 5G will overtake and negate the NBN. I think they're complementary.
Bryce: [00:33:40] It is widely known that you're currently in a review of the Optus towers, not the comms equipment on the towers, but just the actual structure that holds that equipment with a view to to sell. Telstra has sold off its towers, and TPG is also in a process to do something similar. So obviously we are aware that you can't speak to specifics, but can you broadly explain why selling these sort of passive infrastructure is a good play for Optus?
Kelly Bayer Rosmarin: [00:34:10] Yes. So I mean, I think the selling of passive infrastructure assets has become a pretty common global practise because it unlocks the funds that are tied up in these assets. These assets are not differentiating, as you say, they're physical structures. And actually the most valuable part is the rent that we pay and those assets and we can unlock that those funds and use them for more productive and differentiating investments. So why does it make sense to put it out? Because for steady annuity payments that we are committed to, there's actually a high multiple that gets paid on that. And so by separating out that specific set of cash flows explicitly, it helps investors assign a value to that. It sort of gets lost when it's part of the broader telco, so hope they will have. Good news to reveal in this space soon, but I think it's been the right process for us to involve them.
Alec: [00:35:05] So Kelly, we could talk about the telco industry all day. It is fascinating and I think it's really illuminating that, you know, these businesses that we all know so well, many of us are customers of. There's just so much going on behind the scenes here at Equity Mates. When we speak to expert investors, they talk about people and culture being so important when it comes to making good investment decisions. So we want to we want to hear a little bit from you about how you approach it. So if we start at the top as CEO of Optus, do you have a leadership philosophy?
Kelly Bayer Rosmarin: [00:35:35] I don't know if I have a leadership philosophy as such. I definitely agree with you that people and culture are absolutely essential to driving a great company and great outcomes for all stakeholders, customers, shareholders, regulators, etc. And so often I look at my leadership as my job is to make sure everybody else in the company is successful, make sure that I'm removing roadblocks and creating the right conditions for other people's success. And I see myself as making sure that everybody is empowered doing their best. And I'm really there to serve them and make sure that they can do that every day. I think for me, that always starts with making sure that there is absolute clarity on the vision and strategy of the company, and that's widely understood by everybody in the company. It can't be a secret. It needs to be something everybody understands. And then I work very hard to make sure that every single person can connect the dots between their daily job and how that supports the strategy and the vision of the company. And then also we've put in place and you purpose and some cultural attributes that we aspire to with associated specific behaviours so that we can have everybody running in the same direction. And I think taking that very deliberate approach and elevating people to be a key pillar of our strategy, which it is our strategy for achieving our vision of lasting love is to create unique customer connexions, be digital everywhere and develop our amazing people. And those are the three pillars. And so people is actually one pillar of our strategy, which means that we devote a lot of time and effort to getting the best out of our people.
Bryce: [00:37:26] So Kelly, your employee, I think more than 7000 people correct me if I'm wrong, and no doubt that has a lot of challenges. But it's become obvious in this conversation that, you know, you're really trying to foster a sense of innovation within the business. So how do you build like the best team and drive innovation through the business and ensure that people feel like they are in a position to be able to, well, essentially innovate?
Kelly Bayer Rosmarin: [00:37:50] Yeah. So I think it starts with this concept of building a team of amazing people and in order to do that well, we describe that as being the right place for the best people to do their best work. And that means really investing in people and then empowering them, empowering them with the clarity of strategy that I just spoke about, but then also providing gratitude, appreciation, acknowledgement, a behaviour that we call recognised impact in the moment. And if we can get really good at that, it's very self affirming for the team. And part of it is also to recognise good ideas. And back then, I'm a firm believer that if you want to drive an innovation culture, you have to show people that innovation is welcome and appreciated. So a couple of the features that I mentioned to you, their ideas that come from this game. So donate your data programme. There were already some passionate people adopted who were trying to find ways to donate data to underprivileged kids who couldn't access it. All I had to do was was come in and say, That's a great idea. Our customers would love to do that. What if we made it available in the app? Let's work together on that and carve out the funding in our very consistent funding pool to make it happen. And then let's celebrate its success as our customers embraced it. And that tells everybody that if you've got an idea somewhere in the organisation, it can turn into something much bigger and the company will back you. Another example is sidekick that I told you about. That really was a passion project from a number of the women and men within office who wanted to make a difference in how people felt about their personal safety. StubHub, which I haven't spoken about yet, is a truly innovative project that bubbled up as ideas from within, and part of what we do is we showcase this kind of thinking. We actually talk about it as a full leadership group. We give recognition to those people. We also run an innovation mindset series where we interview innovative people, and the whole company can dial into that or show up when it used to be in person. So we do a lot of things to. Spire innovation and send the message that ideas are welcome, we do our planning in a very open and collaborative way each year. And so there really is an atmosphere that says if you've got a great idea, we want you to have the backing to be able to put it into practise this.
Alec: [00:40:16] Yeah, I love that approach, Kelly. I love the idea that, you know, innovation can be bottom up and building in these big companies. You're building pathways for, you know, every every day employees to share their ideas and get their ideas off the ground. I think I think that's so important now. We are almost out of time, but we do love to finish with a few questions about your company's future, about Optus future. So if you look out over the next 12 months, what does that look like for Optus? Is there anything exciting in the product pipeline that you can talk to us about today?
Kelly Bayer Rosmarin: [00:40:48] Yeah. Well, I mean, look, I think firstly, everybody can expect from Optus in the next 12 months that we will provide outstanding connectivity, the fastest 5G in Australia, the best value plan that you can get for all the extras we deliver and a constantly evolving living network. That means I say this to the team and they laugh. I sometimes lie awake at night thinking, why would anybody choose to go to another provider outside of Optus? I mean, you really can't do better than what we provide. That aside, I think everyone can count on us providing all of those things the traditional telco services, as well as those unique living network features and the fastest 5G in Australia for the next 12 months. In addition, we just launched a new product called StubHub, which I didn't talk about yet, which is very innovative, which is if you think about I don't know how many subscriptions you guys have to watch and how many like five more average, about five, I
Alec: [00:41:49] think five just for like streaming services alone.
Kelly Bayer Rosmarin: [00:41:52] Yeah, exactly. So we noticed this as well, and that's been a lot of family people don't forget, Oh, do I actually have them? I haven't watched it for a long time. Does my husband have Netflix? Like, who's got the account when they do? So the idea behind StubHub is that we're providing a hub for all these subscriptions, and we're going to get more and more partners on board. And you'll be able to take all your subscriptions through StubHub, and then you'll be able to see which ones are using which ones. You're not how much you're spending. And we're going to use the collective scale of our customer base to make sure that we can give discounts to people who have multiple subscriptions. So if you have three or more, you'll get 10 percent off all those subscriptions and will also be able to bring exclusive offers to our customers on StubHub. So we launched and for example, Amazon Prime gave our customers a free, really, really exciting additional new service from Optus. And it will only grow in its utility and we continue to add more partners. We launched with the number of partners and have a whole bunch that we announced at launch that are coming online before Christmas, and we'll keep building that out over 12 months so that Australians have a true subscription hub that they can use to really get the most out of all their background subscriptions that we're all managing.
Bryce: [00:43:09] So Kelly, what would you say is the biggest risk to Optus right now?
Kelly Bayer Rosmarin: [00:43:14] I mean, obviously always the unexpected. Any sort of market shock or something you don't expect could be a big risk. But honestly, aside from that, our biggest risk is that we have such ambitious plans. On the innovation front. Some of the features that we're delivering are, well, first things like Optus poll that I didn't talk about in the world first. Our biggest risk is that we're overambitious and we don't execute on all our plans in a timely way. Sounds like that's something, yes, something. But that's something that we have to manage, and I always like to strike a balance. I'd rather that they're not being ambitious enough. And, you know, it means that the teams are very stretched. They're under a lot of pressure to deliver game changing things. But I think that's at least more exciting in the alternative side. But it is a risk, and it's something I have to make sure that we're being both brave and also humble enough to collect call for any organisation needs it.
Alec: [00:44:16] And then Kelly, final question. And before I ask it, I just want to say a massive thank you for joining us today. We've got a lot out of this conversation. We've really we've really enjoyed hearing about Optus from yourself. But you know, we're long term investors here at Equity Mates. We like to really think, you know, in two decades time horizon rather than months or even years. So if you think about Optus in ten years time, what would success look like?
Kelly Bayer Rosmarin: [00:44:42] Well, I hope we get there before 10 years, but I I would like us to be Australia's most loved every day brand with lasting customer relationships. I'd like the rest of the industry to be chasing us on all of our innovative features they already are and some things you know we can. Uber partnership, delivering phone to our customers within an hour. A couple of months later, Telstra tried to do it with somebody else. In two hours. So I want to see the industry that is chasing us because we do have the most loved everyday brand with lasting customer relationships.
Bryce: [00:45:18] Awesome, Kelly. Well, it's been an absolutely fascinating industry discussion. There's so much going on and we very much appreciate your time. It's one of those industries that I feel everyone in our community knows about. But when you scratch under the surface, like Ren said at the start of the show, there's so much going on and we very much appreciate your time and helping us unpack and understand it all. So all the best with your ambitious plans, we can't wait to. I can't wait to experience 5G at some point and we look forward to catching up again at some point in the future.
Kelly Bayer Rosmarin: [00:45:50] Excellent. Thank you so much and good luck to you guys as well. It's great how well all your podcasts are going, and I hope your investing is going equally as well or better. Debateable.
Alec: [00:46:02] Yeah, we'll take it.
Bryce: [00:46:05] We appreciate your time. Thanks, Kelly.
Kelly Bayer Rosmarin: [00:46:06] Thanks so much.
Bryce: [00:46:08] Hey, thanks for listening to this episode of Equity Mates. We love hearing from you, so drop us a line at firstname.lastname@example.org. Or even better, go to your podcast player and leave a five star review. Also, a reminder that the Equity Mates content train doesn't stop when you've run out of episodes to binge. We've got a brand new website, a Facebook discussion group where on Instagram, YouTube and slowly making our way as an influencer on Tik-tok. Thanks Ren. So come and say hello and join the community. We'd love to welcome you. Until next time.