Telstra has posted an unexpected 11.8 per cent fall in first-half profit, dragged down by falling revenues for its mainstay fixed-line and mobile telephone business.
The telecoms giant said in a statement to the Australian Securities Exchange that its underlying profit for the six months to December 31 was $1.79 billion, lower than company guidance for mid-to-high single-digit profit growth through the year. It also missed analysts' expectations for an underlying profit of $2.04 billion.
Mobile revenue declined 8.7 per cent to $5 billion compared with the first half of last year, while overall revenue from Telstra's fixed-line business declined 4.7 per cent to $3.3 billion.
Chief Executive Officer Andrew Penn said the results showed Telstra had "performed well" in face of increased competition in the market.
For the full year, Telstra reconfirmed its forecast of mid to high-single digit net income growth and low to mid-single digit operating earnings growth, but said it was now likely headed for the bottom end of the range.
Telstra dominates the nation's mobile telephone and broadband industries. But like incumbent telecoms around the world, Telstra is facing falling profits from its traditional fixed-line networks and competition is squeezing mobile margins.
"Fixed voice is in decline as some people give up fixed voice, but we kept our decline there in single digits which is creditable compared to the rest of the world," Telstra chief financial officer Warwick Bray told Reuters by phone.
The company said a one-off regulatory charge stemming from government price-setting in the wholesale messaging market had weighed in particular on the mobile business, which reported an 8.7 percent fall in revenue.
Telstra is also facing an additional hit to earnings before interest, tax, depreciation and amortisation, forecast by the company of between $2 billion and $3 billion from the loss of its wholesale business when the government-owned NBN broadband network replaces Telstra's copper lines completely by around 2020.
"The opportunity for Telstra is as the existing fixed business disappears, which it will do, the challenge and opportunity for us is to build a vibrant NBN reseller business," Bray said, adding that so far, Telstra had a 51 per cent market share on the new network.
The company announced a steady interim dividend of 15.5 cents per share, fully franked, returning $1.8 billion to its shareholders.
More to come...
Reuters
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