'Failed people in real need': Telstra shares lower on triple-0 network outage penalty

Telstra Group Ltd (ASX: TLS) shares are falling on Wednesday morning.

At the time of writing, the telco giant's shares are down slightly to $4.04.

Why are Telstra shares falling?

Today's decline is likely to be due to broad market weakness following a poor night of trade on Wall Street.

In addition, news that the company has been hit with a fine could be adding to the negative sentiment today.

This morning, the Australian Communications and Media Authority (ACMA) revealed that it has fined Telstra a penalty of more than $3 million for failing to comply with emergency call rules during a technical disruption at its Triple Zero emergency call centre.

According to the release, an investigation found 473 breaches of the rules relating to an incident on 1 March 2024, during which Telstra's Triple Zero call centre was "hampered in transferring calls to emergency services for 90 minutes."

The ACMA notes that while Telstra still successfully managed to transfer the remaining 346 calls using its backup phone list, it could not provide the caller's digital location information to the emergency service organisations due to the disruption.

'Failed people in real need'

Commenting on the matter, ACMA member and consumer lead Samantha Yorke said:

Telstra, as the emergency call provider, is at the centre of this critical public safety service. As such, it must have fail-safe systems and processes in place at all times. In this circumstance its systems and contingency plans failed people in real need.

One positive for Telstra is that Yorke acknowledged that the telco leader has historically had a strong record of compliance in its role as the national Triple Zero operator. She also highlights that Telstra made considerable efforts to keep the public informed during the outage. Ms Yorke said:

Telstra has been open and apologetic about the outage, communicated effectively to the public and took a variety of immediate actions when problems were identified. These actions go a long way to restoring the community's trust in this critical service.

The ACMA also points out that Telstra has taken action to rectify its processes following the incident. This includes updating its backup phone number list and appointing an independent consultant to conduct an incident review.

While $3 million is a lot of money, given that Telstra is guiding to underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) in the range of $8.5 billion to $8.7 billion in FY 2025, this fine will ultimately be just a drop in the ocean for the company.

The post 'Failed people in real need': Telstra shares lower on triple-0 network outage penalty appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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