Telstra dumps controversial billing fee

It was a rare admission from a Telstra chief executive - "I made a mistake".

David Thodey, facing his first annual general meeting as company head on Wednesday, took full responsibility for introducing a $2.20 administration fee for bills paid over the counter or by mail.

The fee, introduced on September 14, will no longer be charged.

"I made a mistake ... we should not have implemented this change in the way we did," Mr Thodey told shareholders at the meeting.

"I take responsibility for the $2.20 introduction, because I made the decision on a recommendation."

The person who made the recommendation is no longer with Telstra, he said.

While a potentially embarrassing move, Mr Thodey's decision to scrap the fee adds weight to his often-repeated goal of improving Telstra's customer relations.

"We tried to impose this change without first listening to the people it would affect," he said.

"That is not consistent with my commitment to put customers at the heart of everything we do.

"It's not the sort of company Telstra wants to be."

Amid falling numbers of fixed-line telephone connections and the uncertainty created by the proposed national broadband network, Mr Thodey has pinpointed improved customer relations as the key to Telstra's ongoing financial performance.

"The most important thing for us is actually retaining our customers, because we have such a large customer base," he told the meeting.

"So every customer I can retain, every percentage point of churn that we reduce creates enormous value for this company."

For three hours Mr Thodey listened attentively to shareholder complaints about billing, customer service and products.

"I am so sad to hear these stories. It makes me upset like you," he said.

In response, he said Telstra now had just one phone number and one email address to which customers could send their complaints.

The company could only improve as customers gave feedback, Mr Thodey said.

He also used the opportunity to again flag a change to Telstra's pricing on its broadband products in the near future.

However, he conceded Telstra will never be the cheapest internet service provider.

"I want to stress we want to have products that people value, i.e. reliability, service etcetera, but they must be competitive," Mr Thodey said.

"I don't think we'll ever be the cheapest but we will be competitive, and we have a real commitment to that."