Telstra's FY profit plunges nearly 40%, EBITDA down 21% on NBN impact

Thursday 15 August 2019 | 09:09 CET | News
Australian operator Telstra reported total income of AUD 27.8 billion for the full year ended 30 June, which represents a decline of 3.6 percent year-on-year. EBITDA also fell 21.7 percent to AUD 8 billion, while net profit after tax plunged 39.6 percent to AUD 2.1 billion. The operator said the results were in line with guidance and market expectations and showed strong progress on its T22 strategy.

According to Telstra, the largest reason for the decline in EBITDA was the impact of the NBN. To date, Telstra estimates the NBN has adversely impacted EBITDA by AUD 1.7 billion since FY16. The operator also estimates it is around 50 percent of the way through the recurring financial impact of the NBN.

Telstra also reports it had good momentum in its cost reductions programme, reducing underlying costs by AUD 456 million in the year, which means it has achieved AUD 1.17 billion in reductions since FY16 and is on track to achieve its AUD 2.5 billion net cost reduction target by FY22. 

Telstra shareholders will receive a final dividend of 8 cents per share, comprising a final ordinary dividend of 5 cents per share and a final special dividend of 3 cents per share, to be paid on 26 September. Combined with the interim dividend paid in February, shareholders will receive a total dividend of 16 cents per share for FY19, taking the total returns paid to shareholders to more than AUD 1.9 billion.

Telstra added 378,000 net retail postpaid mobile services and 107,000 net new fixed-line retail bundle and data services in the period. These figures included strong contributions from Belong. Telstra’s Internet of Things business grew by 19.4 percent in revenue. On average 2,000 ‘things’ are being connected to Telstra’s IoT network every day, including vehicles, machines, infrastructure, smart meters and a wide array of other sensors. 

In about a year since it announced its T22 strategy, the company has reduced the number of Consumer & Small Business plans in market from more than 1800 plans to 20 and removed customer pain points, such as excess data charges in Australia on all new plans. By introducing simpler products and providing more ways for customers to self-serve, the company says it has reduced calls to its Consumer & Small Business call centres by 22 percent with nearly 7.7 million fewer calls in FY19.

For FY2020, Telstra expects its total income to range between AUD 25.7 and AUD 27.7 billion, underlying EBITDA in the range of AUD 7.3 to AUD 7.8 billion, restructuring costs of AUD 300 million, capex of ADU 2.9-3.3 billion, and free cash flow after operating lease payments of AUD 3.4-3.9 billion. Telstra expects net one-off NBN DA receipts (less NBN net cost to connect (C2C)) of between AUD 1.6 billion and AUD 2 billion.

Telstra also expects FY20 to be the biggest in-year NBN headwind to date, with between AUD 800 million to AUD 1 billion expected from the recurring impact of the NBN. Underlying EBITDA, excluding the recurring in-year headwind of the NBN, is expected to grow by up to AUD 500 million in FY20.

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Categories: General
Companies: Telstra
Countries: Australia
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