Australia’s largest operator Telstra reported a sharp increase in profit for its fiscal year ending 30 June, due to a one-off gain, but mobile and fixed revenue fell despite gains in mobile and fixed broadband subscribers.

Its net profit after tax increased 36 per cent to AUD5.8 billion ($4.4 billion), but that included an AUD1.8 billion gain from the sale of Chinese online business Autohome. EBITDA rose 2.6 per cent to AUD11 billion.

Revenue on a reported basis from continuing operations was up 3.6 per cent to AUD27.1 billion, with sharp increases in global connectivity revenue and NBN related income driving the increase.

Mobile revenue declined 2 per cent to AUD10.44 billion due to regulatory changes to voice and SMS terminating charges as well as lower international roaming charges. Both postpaid and prepaid ARPU were down about 2 per cent.

Its mobile user base increased by 560,000 to a total of 17.2 million.

Fixed revenue fell 2.2 per cent to AUD7.03 billion largely due to continued decline in the number of fixed-voice users and the impact of regulatory changes. Telstra said the rate of fixed-voice revenue decline was broadly maintained due to retention activities such as bundles. The number of customers on bundled plans increased by 322,000 to 83 per cent of the retail fixed data customer base. It added 235,000 fixed 
broadband customers during the period.

“There is no doubt that competitive intensity has increased across our segments and products. The rollout of NBN has progressed and the pace of technology innovation has continued to accelerate,” said Telstra CEO Andrew Penn (pictured below).

Penn
The operator’s capex for the year was up nearly 13 per cent to AUD4 billion. It upgraded 2,375 network sites to 4GX and reached 98 per cent population coverage with 4G.

Operating expenses rose 6.4 per cent to AUD16.6 billion. The increase was largely due to new growth businesses, and sales costs directly associated with revenue and customer growth in core businesses.

Additional future investments
The operator plans to invest up to an additional AUD3 billion over the next three years on next-gen networks and digitisation to improve customer experience.

Penn said: “Telstra is making a strategic commitment to ensure continued technological leadership to significantly improve customer experiences.”

He noted its capex to sales ratio in each of the next three financial years will increase to about 18 per cent, the highest since 2008-09 when it was building up its 3G network.

He confirmed an AUD1.5 billion buy-back programme for shareholders.

For fiscal 2017 the company expects mid- to high-single digit income growth and low- to mid-single digit EBITDA growth.