Published: Thu, February 15, 2018
Business | By Tara Barton

NBN, streaming foray drag down Telstra profits

NBN, streaming foray drag down Telstra profits

Capital expenditure is expected at AUD 4.4-4.8 billion in the full year or 18 percent of sales, after spending AUD 2.3 billion in the first half.

Without the Ooyala impairment of $273 million, profit would have been up 10%.

Telstra's total revenue was up 5.9 percent to $14.5 billion.

According to Penn, of the estimated $3 billion annual impact set to arise from the rollout of the NBN, Telstra has, to date, cumulatively absorbed approximately $870 million of the negative impact to EBITDA (earnings before interest, tax, depreciation and amortisation) from the national network, including $370 million in the latest six month period.

Also beyond standard fixed and mobile telco offerings is Telstra's Internet of Things (IoT) business, which Penn said is continuing to grow, pointing to the acquisitions of MTData and VMtech and the launch of its Cat-M1 IoT network during the half.

Telstra has also cut its interim dividend to a fully franked 11 cents, down from 15.5 cents a year ago, as part of a change to its long-held dividend maintenance policy flagged in 2017.

"We have seen strong demand for our cybersecurity offerings in the context of a market where this is becoming an increasingly important issue for companies and boards", he said as he revealed the plans.

"While we announced increased targets in August, we will look to do even more, again increasing our focus on reducing costs", says Penn. We have a deeper sense of great urgency and we're stepping up against competition.

White House releases infrastructure proposal
The presidential budget is important only in that it signals what the president thinks the nation's priorities should be. The President will lobby hard for the infrastructure proposal because the success of his 2020 run may depend on it.

Chief executive Andy Penn said Telstra had performed well overall, despite the NBN pressure, with underlying profit - which excludes a $273 million writedown of Telstra's USA streaming business - up 10.3 per cent to $2 billion.

"The impact of the NBN, along with increased competition, highlights the importance of the up to $3 billion strategic investment program, and we are on track to deliver economic benefits from this of more than $500 million of earnings by FY21".

Telstra today reconfirmed 2018 full year guidance with income of $27.6 billion to $29.5 billion and EBITDA of $10.1 billion to $10.6 billion.

Penn also revealed that Telstra had spent $100 million on the digitisation program so far, saying it was still in its early stages but had already delivered some early wins like improving Telstra's digital self-service channels.

For the period, the telco added 235,000 retail mobile services - 130,000 postpaid handheld services, to 17.6 million.

The telco also added 454,000 NBN connections in the half-year, maintaining its position as the largest NBN retailer provider with 51 percent market share.

During the half, Telstra added about 57,000 retail bundled customers - one third of the bundles include entertainment packs.

Like this: