Australian operator Telstra’s profit and revenue declined in the first-half of its fiscal 2020, as rising costs related to widespread bushfires and a National Broadband Network (NBN) rollout weighed on its financials.
CEO Andrew Penn (pictured) hailed progress on its T22 transformation strategy, which reaches the halfway point this year, but highlighted the impact of bushfires and a drought on customers and business.
In the six months to end-December, the operator booked one-off costs of AUD10 million ($6.7 million) involving the fires, though it expects the total impact of the event to hit AUD50 million. BBC News reported an area of 11 million hectares was affected by the wildfires.
Penn said Telstra knows “there is more work to do and we still face challenges within our business and across the telecommunications sector”.
Net profit dropped 7.6 per cent year-on-year to AUD1.14 billion, while revenue slipped 3.4 per cent to AUD12.2 billion. The main reason for the profit decline was the NBN, with a AUD360 million charge on the programme booked in the period.
Underlying fixed costs declined by AUD422 million, or 12.1 per cent, resulting in a reduction AUD1.6 billion since fiscal 2016. The company said it completed 6,900 of 8,000 job cuts announced in June 2018.
In fiscal H1, mobile revenue of AUD5.3 billion was flat, with a 13.4 per cent jump in hardware sales to AUD1.7 billion offsetting a 3.6 per cent decline in post-paid revenue to AUD2.57 billion and a 13.4 per cent fall in prepaid to AUD388 million.
The operator added nearly 500,000 mobile subscribers, taking its total 18.5 million.
Post-paid ARPU fell 7.4 per cent to AUD52.52, but the rate of decline is expected to ease in fiscal H2 as new bundled plans gain traction.
Fixed-line revenue fell 10.9 per cent to AUD2.39 billion, while enterprise sales dipped 1.8 per cent to AUD3.88 billion.
Capex fell 41.6 per cent to AUD1.37 billion, with full year spending forecast at AUD2.9 billion to AUD3.3 billion, down from AUD4.1 billion in fiscal 2019.
Telstra said it rolled out 5G service in 32 cities, with more than 100,000 5G-capable devices connected. Around a quarter of Android devices sold since July 2019 were compatible with the technology.
The company maintained its full-year guidance for total income of AUD25.3 billion to AUD27.3 billion and restructuring costs of around AUD300 million.Subscribe to our daily newsletter Back