Telstra buys into mining technology sector

SYDNEY • Australia's largest telecoms group Telstra Corp has taken a bet on the resource industry's appetite for cash-saving technology, from drones to wireless production-tracking, snapping up a specialist firm to set up a dedicated mining services unit.

In what could be one of the boldest bets yet for a major player outside the mining sector, Telstra said it would acquire wireless technology company CBO Telecommunications for an undisclosed sum.

It has also hired the former chief automation researcher at mining giant Rio Tinto, Mr Eric Nettleton, as well as the former head of technology and innovation at South Africa-listed Anglo American Platinum, Ms Jeannette McGill.

Slumping commodity prices have pushed miners to consider new ways to cut spending and improve productivity, laying the groundwork to move beyond just larger trucks and better machines to being the first industry to embrace remote online connectivity between physical elements, a concept referred to as the "Internet of things".

"Telstra has taken a global leading position here, since most of the traditional telcos are way behind," said Mr Paul Budde, telecommunications researcher at Paul Budde Communication.

Having Australia's seventh-largest company investing in resources automation will likely spur new interest in the sector from other telcos, he added.

"This downturn has created a once-in-a-lifetime shift, where miners are looking to technology innovation," Telstra's head of global industries David Keenan said in a statement yesterday.

The unit initially plans to sell products and services for mine communication that use high- speed wireless Internet to improve productivity. The formerly state- owned company, which dominates the mobile telephone and broadband industries in its home country of 24 million people, has been exploring new industries to build revenue as more households drop fixed-line telephone services.

In 2014, it boosted its Asian presence by buying undersea cable company Pacnet. It has also sought to tap Australia's growing demand for online content viewing by selling streaming media players to its customers, as well as setting up online healthcare and cloud computing units.

Still, the move into mining technology may have unnerved some investors, with Telstra shares down 1 per cent yesterday.

"Anything that's got the word 'mining' in it, people have bad feelings about, but it's not a mining investment, it's a business venture that leverages their existing technology," said Morningstar analyst Brian Han.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 24, 2016, with the headline 'Telstra buys into mining technology sector'. Print Edition | Subscribe