Telstra profit takes a tumble

TELSTRA has reported a 28 per cent fall in first-half profit and slashed its payout to shareholders.

Australia’s biggest telecommunications group said yesterday that profits continued to be squeezed as it lost wholesale revenue to the company rolling out the national broadband network.

However, Telstra also reported turnover was down in its fixed-line, data division and network storage operation.

Although revenue from its mobile customers was up, profit margins were down because of increased mobile competition, the company said.

Telstra reported a net profit for the six months to December of $1.23 billion, compared with $1.7 million the same time a year ago.

Total revenue was down 4.1 per cent to $13.79 billion, while earnings before interest and tax was down 26 per cent to $2.12 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,” Mr Penn said yesterday.

“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.”

Shareholders will receive a dividend of 8¢ a share, fully franked – a 27 per cent cut from 11¢ a year ago.

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 approximately 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.