Australian mobile operator Telstra reported a sharp drop in profit for its fiscal year ending 30 June as revenue growth stalled due to rising competition and falling ARPU.

The market leader’s net profit fell 8.9 per cent year-on-year to AUD3.53 billion ($2.6 billion), with total revenue flat at AUD26 billion. Mobile turnover edged up 0.4 per cent year-on-year to AUD10.1 billion; fixed revenue declined 9.2 per cent to AUD5.8 billion.

Telstra CEO Andrew Penn said despite strong customer growth, the challenging trading conditions are expected to continue in fiscal 2019, including ongoing pressure on ARPU and further negative impact of the NBN network rollout on its underlying earnings.

“While it is less than two months since we presented our new strategy, we are well into the execution phase, building on the momentum provided by our up to AUD3 billion strategic investment in networks for the future and digitising the company,” he said.

Telstra announced the restructuring plan in June, seeking to simplify its operations and product offering; improve customer service; and reduce costs by AUD1 billion by mid-2022.

Post paid growth
Mobile broadband revenue fell 10.3 per cent year-on-year to AUD890 million due to lower ARPU and the loss of 37,000 customers. The company said the decline accelerated in H2 compared with H1 due to shared data impacts and a decline in prepaid users. Mobile equipment revenue increased 9 per cent to AUD2.34 billion largely due to a higher volume of devices sold at a higher price per unit.

Machine-to-machine revenue grew 13 per cent to AUD165 million.

Mobile subscribers increased by 342,000 during the year, bringing the total to 17.7 million. Telstra ended June with 7.9 million post paid customers, an increase of 304,000 over the previous fiscal year. Post paid ARPU fell 4.9 per cent to AUD57.67, while prepaid ARPU was down 1.2 per cent to AUD22.36.

Capex in fiscal 2018 rose 2.4 per cent to AUD4.7 billion.

For fiscal 2019 the company forecast revenue to range between AUD26.5 billion and AUD28.4 billion, with additional restructuring costs expected to be around AUD600 million. Capex is tipped to be between AUD3.9 billion and AUD4.4 billion, or approximately 16 per cent to 18 per cent of sales