NBN weighs on Telstra - Mobile World Live

NBN weighs on Telstra

15 AUG 2019

Telstra posted a huge drop in profit for its fiscal 2019 ending 30 June, as costs related to Australia’s National Broadband Network (NBN) more than offset gains in mobile.

Profit declined 40 per cent year-on-year to AUD2.15 billion ($1.45 billion) and revenue slipped 2.3 per cent to AUD25.3 billion. Telstra stated it took an AUD600 million hit on its EBITDA related to NBN, estimating the national network had adversely impacted EBITDA by AUD1.7 billion since fiscal 2016.

The operator believes it is around 50 per cent of the way through the recurring financial impact of the NBN.

Turning point
Telstra CEO Andrew Penn (pictured) said: “FY19 has been a pivotal year for Telstra. Notwithstanding the intense competitive environment and the challenging structural dynamics of our industry, it is a year in which I believe we can start to see the turning point in the fortunes of the company from the changes we have embraced.”

As part of its T22 restructuring plan it cut underlying fixed costs by AUD456 million, or 6 per cent.

Penn said it made good progress on its commitment to “remove hierarchies and silos and redesigned our organisation from the ground up. We already removed three management layers and are on track to reduce up to four”.

He noted about 75 per cent of the net 8,000 direct workforce role reductions it announced in 2018 have now been identified.

Handsets drive growth
Mobile revenue increased 1.6 per cent to AUD10.5 billion, driven by a 10 per cent increase in hardware revenue to AUD3.1 billion.

Its subscriber base grew 3.4 per cent to 18.3 million at end-June.

Post-paid revenue edged up 1.2 per cent to AUD5.29 billion, fuelled by continued subscribers gains, but partly offset by a 3.1 per cent decline in ARPU to AUD54.77. Prepaid revenue fell 13.5 per cent to AUD829 million, with ARPU down 8.7 per cent to AUD20.76.

Revenue in its fixed segment, which covers NBN services, fell 9.4 per cent to AUD5.22 billion. Its IoT business posted 19.4 per cent growth, with an average of 2,000 devices connected to its IoT network every day.

For fiscal 2020, the operator forecast total income of AU25.7 billion to AUD27.7 billion (flat or down slightly), restructuring costs of around AUD300 million and capex of AUD2.9 billion to AUD3.3 billion.

Penn expects 5G coverage to increase almost five-fold and reach at least 35 cities. It deployed about 320 5G-enabled base stations in ten cities.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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