Telstra facing potential legal action over DCB services withdrawal

Telstra is facing potential legal action from Sydney-based marketing provider Impelus, over the telecommunication giant's decision to axe direct carrier billing (DCB) for its customers.

Direct carrier billing is a service currently offered to Telstra customers which allows them to pay for media content and subscriptions like music and applications by adding costs to a customer's bill.

As reported by the ABC, the service is controversial as some customers have described situations where they would be charged by third parties without consent.

However Telstra's decision to axe the service by March 2nd for its DCB providers has not sat well with Impelus (one of the DCB providers), who argue the telco has an ongoing obligation to provide the services after the cutoff date.

In a statement to shareholders, Impelus CEO and MD Neil Wiles says, "While, as previously announced, Impelus has classified its DCB operations as non-core (and has been reducing costs in that area of its operations and focusing on its existing and profitable technology-led Digital Performance Marketing business), premature withdrawal of the Services in March 2018 in breach by Telstra will have a material impact on Impelus' FY2018 revenue and earnings before interest and tax (EBITDA).

"The Company estimates that the impact on EBITDA for FY2018 is in the range of $550k to $680k.

The company says it is extremely disappointed with Telstra after having shared a long and successful relationship in DCB for more than 4 years.

Wiles says that while directors are still seeking to resolve the conflict, legal action is now being considered.

"The directors remain committed to a resolution of this issue but are of the view that the commencement of proceedings in the Supreme Court is in the best interests of all shareholders at this time to preserve the Company's rights that have been breached by Telstra," he says.