Empirical Examination of Customer Retention

Question: Discuss about the Empirical Examination of Customer Retention. Answer: Introduction: In the current situation of the telecommunication industry in Australia, Telstra Group is the largest operator in the country (Telstra.com.au 2017). This company operates its business on worldwide basis. The company currently has many subsidiary companies and some of the subsidiary companies of Telstra are Foxtel, Boost Sim, Telstra Singapore Pte. Ltd, Ooyala, Ericsson and Qualcomm Technologies Inc and NetGear Inc (Telstra.com.au 2017). The company has joint venture in china and Indonesia. In China, the joint venture of the company is Telstra PBS and in Indonesia, the joint venture is Telkomtelstra (Telstra.com.au 2017). The products and services of the joint venture of Telstra are in high demand. The management of the company has invested high amount of money in different acquisitions, different controlled entities like, Telstra Holdings Pty Ltd, Telstra Inc, Telstra International Limited, Telstra International (Aus) Limited, Telstra iVision Pty Ltd, Telstra Pay TV Pty Ltd and many others (Telstra.com.au 2017). The company has also invested in the joint ventures like, Foxtel Partnership, Customer Service Pty Ltd, Reach Ltd and others. The main business of the is based on the products and services like, fixed line telecommunication service, mobile telephony service, network service, internet and data service and digital television (Bhatti, Abareshi and Pittayachawan 2016). The parent company that is Telstra Corporation Limited prepares the consolidated financial statements when the subsidiaries of the company have separate legal entity. This is because, the AASB (Australian Accounting Standard Board) 10 and IFRS (International Financial Reporting Standards) 10 have suggested that the parent company requires preparing the consolidated statements in order to specify or prove its control over its subsidiaries (Aasb.gov.au 2017). As Telstra follows the accounting guidelines provided by AASB and IFRS, the company is bound to prepare the consolidated financial statements even if the subsidiaries of the company have separate legal entity. In Telstra Corporation Limited, the group of the companies is funded through share capital (Telstra.com.au 2017). The annual report of the Telstra group disclosed that there is no debenture used for funding the group of companies. At the same time, the company has also issued bonus share (Telstra.com.au 2017). The Telstra Corporation Limited owns the group of the companies. The group financial statements of reveal the policies of the company regarding its corporate governance, sustainability and solvency. As per the annual report of the company, the corporate governance of the company follows the principles and recommendations provided by ASX Corporate Governance Council (Telstra.com.au 2017). The corporate governance policies of the company ensures the health and safety of the people within the company, maintenance of the privacy of companys customers, inclusion of anti-bribery and anti-corruption strategies, proper strategies for avoiding the conflicts between the employees and management and maintenance of interests of each stakeholders of the company (Samudhram, Siew Sinnakkannu and Yeow 2016). At the same time, the corporate governance policies of the company also ensure proper disclosure of financial position of the company and maintenance of standard transparency level. The annual report of Telstra Group discloses that the company has aimed achieving the sustainability by creating positive impact on the employees, management, customers, shareholders and other stakeholders of the company (Telstra.com.au 2017). At the same time, the sustainability policy of the company also states that it is the objective of the company minimizing the overall environmental impacts (Merrett, Smith and Trindade 2016). The sustainability priorities of the company are - achieving environmental leadership, connecting everyone and full employee involvement. The financial statements of the company also indicate the solvency policies of the company. The solvency policy of the company states that the company follows a statistical approach in order to determine and manage the debt risk properly (Telstra.com.au 2017). At the same time, it also indicates that the company applies the historical impairment rates for better debt management. The prior information regarding the insolvency of the debtors and the information related to the other risks help the company maintaining its solvency properly (Featherstone 2016). The annual report of the company also states about the policies of the audit committee of the company. The Audit and Risk Committee of the company works based on the policies like, clear and open communication with the shareholders, appointing skilled, diverse and experienced board committee, clear delegation of authority, accountability and decision making, proper risk management system and maintaining and prioritizing the values and code of conducts of the company (Telstra.com.au 2017). Revealing the policies of the company related to the corporate governance, audit committee, sustainability and solvency is important because these indicate the transparency level of the financial reporting of the company (Liu et al. 2016). This actually helps the stakeholders, especially the shareholders and investors in taking investment decision. Along with that, proper information regarding the companys corporate governance, sustainability and solvency help the management setting the future goals (Perri and Shuli 2016). The non-controlling interests of the company can be identified under the consolidated income statement and statement of financial position of Telstra Group (Telstra.com.au 2017). The non-controlling interests represent the proportion of the equity ownership of the subsidiary companies of Telstra Group on which are not attributable to the parent Telstra Company (Merrett, Smith and Trindade 2016). However, the financial reports of the company do not provide any detailed information regarding the direct and indirect proportion of non-controlling interest. The company has gained goodwill on acquisition, which can be identified the Table A, where the summaries of the effects of the acquisitions done by Telstra Group are shown (Telstra.com.au 2017). In the annual report, this section can be identified under the Section 6 (Telstra.com.au 2017). The goodwill on acquisition indicates the proportion of goodwill that the company that is Telstra Group has gained by acquiring the subsidiary companies (Bhatti, Abareshi and Pittayachawan 2016). The financial report of the company discloses the impairment of the financial assets of the company. The annual report disclosed that in 2015, the total amount of impairment loss of the company was $1093 million (Telstra.com.au 2017). In the financial year 2016, the impairment loss of the company excluding the impairment of inventories, trade and other receivables was $266 million (Telstra.com.au 2017). In case of goodwill of Oolaya Holdings Group, the amount of impairment loss in 2016 was $246 million (Te lstra.com.au 2017). The Telstra Group has foreign subsidiary companies and it has conducted foreign currency transactions and the annual report of the company has disclosed that the company has translated the foreign currency transactions into proper and relevance functional currencies based on the spot exchange rate on the date of transaction (Telstra.com.au 2017). However, in the financial statements of the company do not show anything related to the foreign currency transactions. Moreover, by analyzing the annual report of Telstra Group, it can be stated that the company has disclosed most of the relevant financial and operational information. Though there are some information like, foreign current transactions, direct and indirect non-controlling interests should have been disclosed. The available financial information of the company indicates that the financial position of Telstra Group is stable. At the same time, the annual report of the company also indicates that the company is very conscious about the maintenance of proper business ethics and better relationship with its stakeholders. Reference list: Aasb.gov.au. 2017. Australian Accounting Standards Board (AASB) - Home. [online] Available at: https://www.aasb.gov.au/ [Accessed 17 Jan. 2017]. Bhatti, H., Abareshi, A. and Pittayachawan, S., 2016. An empirical examination of customer retention in mobile telecommunication services in Australia. InProceedings of the 13th International Joint Conference on e-Business and Telecommunications (ICETE 2016) vol(Vol. 2). Featherstone, T., 2016. The skills set.Company Director,32(5), p.34. Liu, Y.W., Liu, L.C., Wang, C.J. and Tsai, M.F., 2016, October. FIN10K: A Web-based Information System for Financial Report Analysis and Visualization. InProceedings of the 25th ACM International on Conference on Information and Knowledge Management(pp. 2441-2444). ACM. Merrett, A., Smith, R.L. and Trindade, R., 2016. tHe APPLicAtion oF Per Ses to smes the type 1 error no one notices?.Competition Law, Regulation and SMEs in the Asia-Pacific: Understanding the Small Business Perspective, p.123. Perri, R. and Shuli, I., 2016. Financial Statement Analysis In Albania-A Survey Of Its Applicability Among Different Users'class And The Differences From The Developed Countries.CEA Journal of Economics,4(2). Samudhram, A., Siew, E.G., Sinnakkannu, J. and Yeow, P.H., 2016. Towards a new paradigm: Activity level balanced sustainability reporting.Applied ergonomics,57, pp.94-104. Telstra.com.au. 2017. [online] Available at: https://www.telstra.com.au [Accessed 17 Jan. 2017].