Telstra Corporation Ltd (ASX: TLS) shares are down 0.25% on Thursday afternoon after it was revealed to have paid $2.2 million in refunds and penalties.
The sell-off in the morning saw the stock price plunge as much as 0.5% as investors digested the news that the telco had overcharged customers.
The Telstra share price is now down more than 2% over the past week, and 5.8% for the year so far.
The Australian Communications and Media Authority (ACMA) announced before market open on Thursday that the company had paid a $506,160 penalty and more than $1.73 million in refunds after it was busted.
“At a time when Australians are being very careful with their budgets, these errors are particularly concerning as they could have caused considerable strain and distress,” said ACMA chair Nerida O’Loughlin.
“Telecommunications is an essential service for Australian households and businesses, and there are no excuses for overcharging customers.”
Charging customer after they departed
More than 8,000 of the roughly 11,600 impacted customers had been with Telstra’s budget brand Belong.
They were collectively charged more than $1.2 million for broadband after they had switched to another provider.
The problem was particularly concerning as Telstra had already been busted for the same offence in 2020.
“Telstra had already been formally directed by the ACMA to comply with billing rules so should have moved to address these issues and not inconvenienced its customers further.”
The Motley Fool has contacted Telstra for comment.
The errors, which occurred between July 2018 and October 2021, were self-reported by the company. The report triggered ACMA investigations, but the firm independently committed to refunding the overcharges.
According to ACMA, Telstra blamed the mistakes on data transfer issues between its customer relationship management system and its billing system, plus manual processing errors and obsolete instructions for staff.
The excuses didn’t really cut it for O’Loughlin.
“Telstra is the largest telecommunications company in Australia. I would expect its billing systems to be more sophisticated and compliant with industry-wide consumer protection rules.”
Telstra buys set-top box provider
During the day, Telstra announced that it had bought a 51% stake in streaming box provider Fetch.
The $50 million investment values Fetch at around $100 million, with current owner Astro Holdings retaining 49% of the business.
Until now, Telstra had provided streaming boxes branded Telstra TV that were made by US company Roku Inc (NASDAQ: ROKU).
Telstra TV currently had about 800,000 active subscribers, and Fetch has about 670,000 through other partners such as Optus and TPG Telecom Ltd (ASX: TPG).
The deal is subject to regulatory approval.
The post What’s dragging the Telstra share price lower today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tony Yoo 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 Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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