Analyse the issues raised by the article chosen and write a memorandum (a report format will not be marked) addressed to the board of directors of the organisation chosen. You then need to prepare a presentation that could be used to persuade the board of directors of that organisation to hire your consulting company?s services. You should deliver the presentation as if the board of directors is your primary audience. Your analysis should include:

1) A reliable link and reference to the article in order that the board can identify it

2) Consideration of the management accounting issues raised by the article, including any potential strengths / opportunities as well as any weaknesses / threats identified. 3) Consideration of management accounting techniques or tools which lead to solutions / courses of action / lessons learned that you would offer to the board of directors as to how the issues identified can be tackled or how the organisation concerned can improve its performance.

4) Any other relevant matter that you believe will be of use to the board of directors

A presentation of 7-10 minutes to the class (in week 11) summarising your findings is required. The presentation is a collaborative effort, but part of the mark will be awarded on an individual basis (see marking guide below).

chosen news article is attached

TPG deepens Telstra's looming earnings hole Outside Telstra's core fixed and mobile segments, there is little to speak of that could move the dial when it comes to earnings. In July 2008, Vittorio Colao was appointed as the fourth CEO in Vodafone Group's history. His revised strategy for the British-based multinational telecoms company was to focus on key markets where it held a top two position and pursue market consolidation where it didn't. The changes had profound impacts in Australia. A subsequent lack of investment in Vodafone's Australian joint venture with Hutchison led to a period of management and network issues, often termed the Vodafail era. And it proved to be a bonanza for Telstra as customers rushed to change providers, seeking network reliability over lower pricing. Telstra's mobile subscriber base grew from 10.6 million at the end of the 2010 financial year to 17.4 million as of the latest results. And this was achieved with slight price inflation. Better still, Telstra was able to shift its mix of customers away from pre-paid to the more profitable post-paid. This nirvana of volume growth, price increases and positive mix shift led to a dramatic increase in profitability in Telstra's mobile division. The percentage of revenue translating to earnings before interest, tax, depreciation and amortisation (EBITDA) increased from 29 per cent in the first half of 2010 to a world-leading 46 per cent in the second half of the 2016 financial year. Today Telstra's mobile business is the star in the company's line-up. Looming earnings hole Unfortunately the star has been carrying the rest of the team. Looking at the 2016 full-year results, we can see EBITDA from its fixed-line business declined by $158 million and is showing no signs of levelling off. Data & IP EBITDA declined by $101 million in 2016. This division contains legacy technology that is being used less and less (similar to dial-up modems). One-off NBN EBITDA grew to $558 million and will presumably keep growing over the next few years. But this will disappear once the NBN roll-out is complete. Adding these up, we can see that close to $800 million of annual EBITDA will need to be replaced if Telstra is to maintain its 2016 profitability. But that assumes these EBITDA declines actually stabilise. The firstquarter 2017 results reveal that this is unlikely. Fixed EBITDA declined by $164 million on the same quarter a year ago. Data & IP EBITDA didn't fare much better, decreasing $76 million. And one-off NBN EBITDA increased by $279 million. Annualising these numbers sees the earnings hole grow to over $1 billion in just six months. This number could be somewhere between $2-3 billion by the time NBN payments start to wind down. Outside of Telstra's core fixed and mobile segments, there is little to speak of that could move the dial when it comes to earnings. Telstra's network applications and services (NAS) segment makes over $1 billion of revenue and is growing rapidly, but its tiny margins mean it won't offset fixed EBITDA decline. Telstra's "hail Mary" division, otherwise known as new business ventures, lost $246 million last year, with its costs more than double its revenue. A cynic might suggest that Telstra can partially fill its earnings hole by closing down these ventures, which include the enigmatic robot farming and IT health businesses. Body blow from TPG This is why TPG's recent announcement that it is going to build its own mobile network is so important. Telstra's recent decision to increase capital expenditure was made in a market with two other competitors and a seemingly stable competitive environment. Mobile was Telstra's only segment of significant size that participated in a rational, lightly regulated market. TPG is initially targeting a 2 per cent market share or around 500,000 subscribers, at which level it expects to break even on an EBITDA basis. Gaining these subscriber sounds plausible. TPG already resells Vodafone mobile services to around 450,000 customers and can presumably transition some of those customers on to its network. And with 30 per cent market share in fixed line, it wouldn't take a high rate of cross-selling to get to 500,000. According to analysts at investment bank UBS, every 1 per cent of market share TPG gains would have about a 2.5 per cent impact on Telstra's earnings. This is obviously going to depend on how competitors respond, but four competitors is clearly going to be more competitive than three. So TPG gaining just 2 per cent of the market could equate to $550 million less EBITDA for Telstra. Sinkhole Last year it became apparent that Telstra's fixed-line earnings decline and wind down of NBN payments would lead to a $2-3 billion earnings hole in five years. TPG could deepen it by more than $500 million. If it really gets things right in mobiles, the total hole could be $3 billion to $4 billion a year, as much as a third of today's total earnings. Investors have already started to digest this worrying scenario, with Telstra's share price down almost 20 per cent in the past six months. It could get a lot worse yet. Steve Johnson is chief investment officer at Forager Funds Management. AFR Contributor Read more: http://www.afr.com/personal-finance/shares/tpg-deepenstelstras-looming-earnings-hole-20170420-gvof98#ixzz4fsRVGp43 Follow us: @FinancialReview on Twitter | financialreview on Facebook