Telstra comes to its Sensis on search

location based services

TELSTA'S directories business, Sensis, has begun talks with the world's three major internet companies - Yahoo, Microsoft and Google - in a sign it is considering a big strategic shift.
The $1.7 billion a year business has also just signed off on a new information technology transformation - its latest attempt to improve its web interface,
Sensis is, to put it mildly, under pressure as the designated growth powerhouse for Sol Trujillo's big spending "new" Telstra.
Up until recently, Sensis was sticking firm by its Google, schmoogle line: the we-can-do-it-all-ourselves strategy that sucked all the oxygen out of Telstra for so long during the Switkowski years.
But the newly ascendant Gerry Sutton, who recently added the Sensis chief information officer role to his strategy hat, has been quietly talking to the big internet players recently.
The talk is all about search, and specifically local search, which will drive online advertising growth over the next half-decade or more.
For the past few years the growth in internet advertising - the digital rivers of gold - has been all about booming growth in banner advertisements and the move by traditional classified advertisements online.
But that growth, while continuing at a very healthy clip, is starting to slow.
Last year, search grew by about 70 per cent; it is expected to post similar growth for a number of years to come. It is the future.
Sutton's quest for search nirvana is two-pronged. He will talk to the big boys while trying, for a third or maybe a fourth time, to make a converged web platform work.
Sensis wants to be able to get its customers to file an ad, have it go into the Yellow Pages, to its online directories and search portal and also to the developing mobile search platform. It's not as easy as it sounds, and the failure to find a solution to the problem has seen Sensis lose two CIOs in the past 18 months.
IBM, the US IT giant that lately has been winning all the big deals at Telstra, has been pencilled in to help Sutton.
But it has to hurry. This week, Microsoft, through its ninemsn alliance, launched its improved Windows Live search. Come early next year, this will be embedded in Microsoft's new Windows operating system, Vista, and its desktop software, Office 2007, obviating the need to go to the web before you search.
Yahoo is spending tens, probably hundreds of millions on Project Panama, its promised Google killer which will feature, at its centre, a shiny new search platform.
Despite waning relevance, print directories have held up in recent years with the help of ever rising rate cards, but their salad days are fast coming to an end.
It's not just Telstra that's on the horns of this dilemma. It's every directories business across the globe.
Over at Telecom New Zealand, finance chief Mark Bogoievski appears to be pinning his future as Theresa Gattung's successor on two main projects, the remaking of the company's struggling Australian subsidiary, AAPT, and an overhaul of the group's directories business.
Market analysts are tipping TNZ can get 10-14 times EBITDA - top end price of about $1.6 billion - depending on how much tension it can generate between trade and financial buyers.
Telstra's participation may be crucial to generating such tension. In 2004, it went close to getting the Singapore directories and those in Hungary, but it never successfully made an acquisition. But Sensis's recent foray into China, where it bought online property site Soufun for a very full price of $324 million, suggests that the company may be looking for more upside in its acquisitions.
Back to Sutton, who is an interesting case. He is one of the few Switkowski mates - he once worked with the Zigster at Kodak - to have survived the Americans.
Sutton's advantage is that he works for, and gives counsel to, Sensis chief Bruce Akhurst, who is perhaps the most expert political player at Telstra.
Brought in to the telco from its long-time lawyers of choice, Mallesons, by Telstra's first imported chief Frank Blount a decade ago, Akhurst became a Switkowski favourite. He is now, along with finance chief John Stanhope, the local closest to the Trujillo inner sanctum.
sainsburym@theaustralian.com.au
Print