Australian operator Telstra has provided an update on trading for its fiscal year to June based on its results in the period to April. The operator re-affirmed its guidance, but said EBITDA is expected to be at the bottom end of the range and free cash flow is expected to be at the top end to moderately above.
Telstra said it expects the "challenging trading conditions" in FY18 to continue in FY19, including ongoing pressure on mobile and fixed ARPUs and the accelerating impact of the NBN. Telstra plans to provide a further update to the market in the second half of June regarding additional strategies it is implementing to address these pressures, leveraging the investments already made as part of its strategic investment plan.
For third-quarter results, in fixed Telstra reported retail fixed data net adds of 36,000, and claims an NBN market share of 50 percent at the end of March. In mobile, postpaid handheld subscribers increased by 60,000 in the quarter, but were offset by declines across postpaid handheld ARPU (Q3 FY18 -3.6% on PCP), prepaid handheld revenue and mobile broadband revenue. Mobile EBITDA is expected to decline against PCP in FY18 due to these reductions.
Based on the above trends, Telstra expects its FY18 income to be around the middle of the AUD 27.6 – AUD 29.5 billion range, while EBITDA is expected at the bottom end of the AUD 10.1 – AUD 10.6 billion range. Telstra also expects net one-off NBN DA receipts less NBN net C2C2 at the mid- to upper-end of the AUD 1.4 – AUD 1.9 billion range. Capex is expected at the mid- to upper-end of the AUD 4.4 – AUD 4.8 billion range, while free cash flow is expected at the top end or moderately above the AUD 4.2 – AUD 4.7 billion forecast range.
Telstra said it expects FY18 underlying core fixed costs to decline 7 percent. This is expected to result in incremental restructuring costs of AUD 300 million in FY18, in line with guidance of AUD 200 – AUD 300 million.
Telstra is also reaffirming its expected FY18 total dividend of 22 cents per share.
