Telstra blames NBN rollout for profit dive

THE NBN rollout continues to eat away at Telstra’s balance sheet, with the telco giant cutting its interim payout to shareholders after a 28 per cent dive in first-half profit to $1.2 billion.

Telstra’s total revenue for the six months to December 31 fell 1.7 per cent to $12.59 billion amid “intense” competition, though its biggest revenue segment — mobile — grew by 2.4 per cent to $5.29 billion.

Chief executive Andrew Penn said the launch of the 5G network in the coming months would confirm mobile as the “engine room” of the business.

“While today’s financial results show parts of our business continue to face short-term challenges, there are positive signs particularly with the significant increase in retail postpaid mobile services,” he said.

“Telstra’s circumstances today are very different from what they were before the NBN … that part of our business — the revenue and value — is being transferred to the NBN and that is reflected in our income, profit and dividend.”

Telstra shares slumped as much as 21 cents, or 6.5 per cent, at the opening of trade yesterday and finished the day at $3.14, down from $3.43 a year ago. The company will pay an interim dividend of 8 cents, fully franked, down from 11 cents last year.

Yesterday’s result caps a turbulent 2018 for the telco, during which shareholders delivered a first strike against executive pay at the October AGM. In June Telstra announced plans to axe 8000 jobs in response to its weakest full-year profit in six years, which sent its share price down to a near historic low of $2.62.

In the fixed-line market, Telstra added 64,000 net retail bundle and data services during the half, including 22,000 from Belong.

Meanwhile, the company said about 55 per cent of premises are now connected to the NBN, with 308,000 connections added during the half, maintaining Telstra’s market share of 51 per cent excluding satellite.

Mr Penn said he expected the associated costs of the rollout to weigh on results in the short term. The company also confirmed its FY19 guidance from September, with total income expected to be between $26.2 and $28.1 billion, and earnings of between $8.7 to $9.4 billion.