How To Evaluate Telstra And Ethical Performance
BAE Business Report on Telstra
Table of contents
Executive summary
1. Introduction
2. Evaluation of ethical performance
3. Evaluation of financial issue – profitability
4. Recommendation
References
Executive summary
For the purpose, this report is for a client who has interested in Telstra and wants to have an ethical investment. And this report will do the evaluation of ethical performance and financial performance (profitability). Telstra as the largest media company do not storing safety customers’ privacy and let privacy breach happened again and again in four years. Telstra have an unethical performance because it usually has a negative response to deal with those privacy scandals. While in terms of financial aspect, via analyze the profitability, Telstra have a good performance. Although, it has high profits, Telstra is not a good ethical investing which is because of the unethical issue.
Introduction
The purpose of this report is to evaluate Telstra, including the ethical and financial performance for a client who wants to have an ethical investment in it. According to Cowton (cited in Schwartz, 2003, p1), ethical investing refers to ethical business behavior, such as establishing an ethical goal, …show more content…
knowing where the money invested in and gaining an ethical profits. Telstra offers services in telecommunications, media and software areas (Telstra 2014a), including mobile phones, networks and pay television. Telstra employed 31931 employees (Telstra 2014a) and its total assets, total equity and revenue were A$39.36 billion, A$13.96 billion and A$26.3 billion (Telstra 2014b), respectively. This report will evaluate one ethical issue and financial performance (profitability) in Telstra, and then, it will make a recommendation for the client. Finally, this report will give the references list.
1.Evaluation of ethical performance
Although Telstra did some charities and volunteering, such as their Matched Payroll Giving program which means the company covered the funds to help employees donate directly to some charities (Telstra 2014c), there is an ethical issue cannot be ignored. It is lack of respect for customer privacy. There are two representative privacy breach to demonstrate Telstra do not protect their customers’ privacy.
The first one is in May 2013, 1677 customers’ data which were recorded in the spreadsheets, including their names, business or home addresses and phone numbers, were accessible to search through Google search. Other three spreadsheets had 8201 clients’ privacy data except their home address. And other documents which are relevant to the internal Telstra training programs also can be searched through a public search engines (Grubb2013, para8, 9). This emergency was reminded by Sydney Morning Herald (Barwick2013, para3), then Telstra organized a technical team to remove the files offline and start an investigation (Lee 2013, para5). Peter Jamieson , who is executive director customer service for Telstra , written a blog post said that Telstra apologized to customer and indicated they will never let it happen again and Telstra hope win customers’ confidence back (Jamieson 2013). And Australian Privacy Commission investigated how the leaks happened and the compromising information but did not fine Telstra.
The second one is that the Next G mobile phones users’ URLs which they had viewed in their phones before was sent to a Canada website company (Netsweeper). And then, the company will use the users’ information and what they interested in to make a web filtering product (Grubb2012, para1, 2). The Netsweeper is a third party which is relevant to Telstra. Although customers did not know their privacy data was exposed, Telstra sent information about the clients to do their own business for make more profits. This is an unethical issue as well. When the incident had occurred, Telstra did not acknowledged their fault and just said the URLs will not leak the personal information, but some people find that using the information can identify some people(Grubb2012, para4).
In fact, many others privacy breach occurred in recent years. For example, the clients’ details were exposed in April, October and November in 2010, respectively. And in December 2011, 800000 clients’ information was leak on internet which was free to search them. Those privacy breach incident will causes some problems. For example, they may causes problems to customer who will receive junk message and phone call and some of them will let their number silent. And some will cause social problems, such as some people use the information to crime, such as voice phishing (Grubb, 2013, para18).
Although, when every incident happened, Telstra will apologize and said they will investigate and improve their technical to protect customers’ privacy, they did not showing the consequence of their investigation to their customer and they did not showing what approaches they will use to protect the customer information and paying compensation to the victims.
After Telstra’s negative response, customers did not trust Telstra because they think the privacy breach will occur again in the future except Telstra use custodianship instead of ownership in their company culture (Telstra 2013). Telstra’s words are not matched by deeds. They lost many customers trust again and
again.
2.Evaluation of financial issue – Profitability
Figure1: Telstra Corporation Limited Reported NPAT from 2010 to 2014 (Telstra 2014b)
Figure1 indicates net profit after tax of Telstra Corporation Limited from 2010 to 2014. On the bar graph, the horizontal axis shows the years while the vertical axis represents the net profit after tax per year in million Australia dollars. From the data, there was a moderate drop from $3940 million in 2010 to $3250 million in 2011, which was at its lowest level during the five years. This was probably caused by the privacy Act happened three times in the one year. After that, the data rose slowly to $3424 million in 2012, and then, there was an upward trend to $4345 million during the next two years. It can be seen that Telstra had a well performance in profitability. Telstra has amount of loyal stable clients because Telstra has a very long history and it is the largest telecommunication firm in Australia (Telstra 2014a) that can indicate it has stable operation, for example, the clients do not want to change their phone numbers which were used in many years, and it has possibilities of development in the future. This evaluation of financial performance has limitation which means the evaluation just focus on profitability. To sum, Telstra have a good financial profitability.
3.Recommendation
Telstra is not an appropriate choice to invest. Although Telstra has good profitability in recent years, it has an unethical performance, especially they do not protect customer privacy and not good at deal with emergency.
References
Barwick, H2013, ‘Telstra in the sights of Privacy Commissioner’, Techworld, 20 May 2013,viewed 5 January 2015, <http://www.techworld.com.au/article/462300/_telstra_sights_privacy_commissioner_/>
Grubb, B2013, ‘Oops: Google search reveals private Telstra customer data’, The Sydney Morning Herald,16 May 2013, viewed 1 January 2015, <http://www.smh.com.au/technology/technology-news/oops-google-search-reveals-private-telstra-customer-data-20130516-2jnmw.html>
Grubb, B2012, ‘Telstra accused of Next G web 'stalking '’, The Sydney Morning Herald, 5 July 2012, viewed 3 January 2015, <http://www.smh.com.au/digital-life/mobiles/telstra-accused-of-next-g-web-stalking-20120705-21ivs.html>
Jamieson, P2013, ‘Customer information and the importance of privacy’, Telstra Exchange,16 May 2013, viewed 4 January 2015, <http://exchange.telstra.com.au/2013/05/16/customer-information-and-the-importance-of-privacy/>
Lee, M2013, ’Telstra apologetic after old customer data leaks online’, ZDNet, 16 May 2013, viewed 1 January 2015 , <http://www.zdnet.com/article/telstra-apologetic-after-old-customer-data-leaks-online/>
Schwartz, M S 2003, ’The Ethics Of Ethical Investing’, Kluwer Academic, vol 43, pp195-213
Telstra, 2014a, About Telstra , viewed 30 December 2014, <http://www.telstra.com.au/aboutus/our-company/>
Telstra, 2014b, Annual Report 2014 , viewed 3 January 2015, <http://www.telstra.com.au/business-enterprise/>
Telstra, 2014c, ‘Volunteering & giving’, viewed 30 December 2014, <http://www.telstra.com.au/aboutus/community-environment/volunteering-giving/>
Table of contents
Executive summary
1. Introduction
2. Evaluation of ethical performance
3. Evaluation of financial issue – profitability
4. Recommendation
References
Executive summary
For the purpose, this report is for a client who has interested in Telstra and wants to have an ethical investment. And this report will do the evaluation of ethical performance and financial performance (profitability). Telstra as the largest media company do not storing safety customers’ privacy and let privacy breach happened again and again in four years. Telstra have an unethical performance because it usually has a negative response to deal with those privacy scandals. While in terms of financial aspect, via analyze the profitability, Telstra have a good performance. Although, it has high profits, Telstra is not a good ethical investing which is because of the unethical issue.
Introduction
The purpose of this report is to evaluate Telstra, including the ethical and financial performance for a client who wants to have an ethical investment in it. According to Cowton (cited in Schwartz, 2003, p1), ethical investing refers to ethical business behavior, such as establishing an ethical goal, …show more content…
knowing where the money invested in and gaining an ethical profits. Telstra offers services in telecommunications, media and software areas (Telstra 2014a), including mobile phones, networks and pay television. Telstra employed 31931 employees (Telstra 2014a) and its total assets, total equity and revenue were A$39.36 billion, A$13.96 billion and A$26.3 billion (Telstra 2014b), respectively. This report will evaluate one ethical issue and financial performance (profitability) in Telstra, and then, it will make a recommendation for the client. Finally, this report will give the references list.
1.Evaluation of ethical performance
Although Telstra did some charities and volunteering, such as their Matched Payroll Giving program which means the company covered the funds to help employees donate directly to some charities (Telstra 2014c), there is an ethical issue cannot be ignored. It is lack of respect for customer privacy. There are two representative privacy breach to demonstrate Telstra do not protect their customers’ privacy.
The first one is in May 2013, 1677 customers’ data which were recorded in the spreadsheets, including their names, business or home addresses and phone numbers, were accessible to search through Google search. Other three spreadsheets had 8201 clients’ privacy data except their home address. And other documents which are relevant to the internal Telstra training programs also can be searched through a public search engines (Grubb2013, para8, 9). This emergency was reminded by Sydney Morning Herald (Barwick2013, para3), then Telstra organized a technical team to remove the files offline and start an investigation (Lee 2013, para5). Peter Jamieson , who is executive director customer service for Telstra , written a blog post said that Telstra apologized to customer and indicated they will never let it happen again and Telstra hope win customers’ confidence back (Jamieson 2013). And Australian Privacy Commission investigated how the leaks happened and the compromising information but did not fine Telstra.
The second one is that the Next G mobile phones users’ URLs which they had viewed in their phones before was sent to a Canada website company (Netsweeper). And then, the company will use the users’ information and what they interested in to make a web filtering product (Grubb2012, para1, 2). The Netsweeper is a third party which is relevant to Telstra. Although customers did not know their privacy data was exposed, Telstra sent information about the clients to do their own business for make more profits. This is an unethical issue as well. When the incident had occurred, Telstra did not acknowledged their fault and just said the URLs will not leak the personal information, but some people find that using the information can identify some people(Grubb2012, para4).
In fact, many others privacy breach occurred in recent years. For example, the clients’ details were exposed in April, October and November in 2010, respectively. And in December 2011, 800000 clients’ information was leak on internet which was free to search them. Those privacy breach incident will causes some problems. For example, they may causes problems to customer who will receive junk message and phone call and some of them will let their number silent. And some will cause social problems, such as some people use the information to crime, such as voice phishing (Grubb, 2013, para18).
Although, when every incident happened, Telstra will apologize and said they will investigate and improve their technical to protect customers’ privacy, they did not showing the consequence of their investigation to their customer and they did not showing what approaches they will use to protect the customer information and paying compensation to the victims.
After Telstra’s negative response, customers did not trust Telstra because they think the privacy breach will occur again in the future except Telstra use custodianship instead of ownership in their company culture (Telstra 2013). Telstra’s words are not matched by deeds. They lost many customers trust again and
again.
2.Evaluation of financial issue – Profitability
Figure1: Telstra Corporation Limited Reported NPAT from 2010 to 2014 (Telstra 2014b)
Figure1 indicates net profit after tax of Telstra Corporation Limited from 2010 to 2014. On the bar graph, the horizontal axis shows the years while the vertical axis represents the net profit after tax per year in million Australia dollars. From the data, there was a moderate drop from $3940 million in 2010 to $3250 million in 2011, which was at its lowest level during the five years. This was probably caused by the privacy Act happened three times in the one year. After that, the data rose slowly to $3424 million in 2012, and then, there was an upward trend to $4345 million during the next two years. It can be seen that Telstra had a well performance in profitability. Telstra has amount of loyal stable clients because Telstra has a very long history and it is the largest telecommunication firm in Australia (Telstra 2014a) that can indicate it has stable operation, for example, the clients do not want to change their phone numbers which were used in many years, and it has possibilities of development in the future. This evaluation of financial performance has limitation which means the evaluation just focus on profitability. To sum, Telstra have a good financial profitability.
3.Recommendation
Telstra is not an appropriate choice to invest. Although Telstra has good profitability in recent years, it has an unethical performance, especially they do not protect customer privacy and not good at deal with emergency.
References
Barwick, H2013, ‘Telstra in the sights of Privacy Commissioner’, Techworld, 20 May 2013,viewed 5 January 2015, <http://www.techworld.com.au/article/462300/_telstra_sights_privacy_commissioner_/>
Grubb, B2013, ‘Oops: Google search reveals private Telstra customer data’, The Sydney Morning Herald,16 May 2013, viewed 1 January 2015, <http://www.smh.com.au/technology/technology-news/oops-google-search-reveals-private-telstra-customer-data-20130516-2jnmw.html>
Grubb, B2012, ‘Telstra accused of Next G web 'stalking '’, The Sydney Morning Herald, 5 July 2012, viewed 3 January 2015, <http://www.smh.com.au/digital-life/mobiles/telstra-accused-of-next-g-web-stalking-20120705-21ivs.html>
Jamieson, P2013, ‘Customer information and the importance of privacy’, Telstra Exchange,16 May 2013, viewed 4 January 2015, <http://exchange.telstra.com.au/2013/05/16/customer-information-and-the-importance-of-privacy/>
Lee, M2013, ’Telstra apologetic after old customer data leaks online’, ZDNet, 16 May 2013, viewed 1 January 2015 , <http://www.zdnet.com/article/telstra-apologetic-after-old-customer-data-leaks-online/>
Schwartz, M S 2003, ’The Ethics Of Ethical Investing’, Kluwer Academic, vol 43, pp195-213
Telstra, 2014a, About Telstra , viewed 30 December 2014, <http://www.telstra.com.au/aboutus/our-company/>
Telstra, 2014b, Annual Report 2014 , viewed 3 January 2015, <http://www.telstra.com.au/business-enterprise/>
Telstra, 2014c, ‘Volunteering & giving’, viewed 30 December 2014, <http://www.telstra.com.au/aboutus/community-environment/volunteering-giving/>