Telstra Blames NBN, Mobile Competition For 8.9% Profit Decline

Telstra Blames NBN, Mobile Competition For 8.9% Profit Decline
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Telstra has just released its results for the 2018 financial year, which includes a net profit decline of 8.9%, bringing it to $3.35 billion.

Part of the blame is placed on the continued nbn rollout, as well increased competition in the mobile space.

Here are the key takeaways from today’s report:

  • Total income increased 3.0 per cent to $29.0 billion
  • EBITDA reduced 5.2 per cent to $10.1 billion
  • NPAT reduced 8.9 per cent to $3.5 billion
  • Basic earnings per share reduced 7.7 per cent to 30.0 cents

A letter to shareholders from CEO Andrew Penn and Mr Penn chairman John Mullen this morning stated that “These factors have influenced our performance this year and underpinned our decision to take bolder steps to transform the business through our new Telstra strategy.”

What they are referring to is the T22 strategy that was announced on June 20. Its aim is to simplify Telstra’s operations and product set, improve customer experience and have network superiority. It also look to reduce its cost base, which will involve cutting 8000 jobs.

5G also makes up a significant part of the strategy, which kicked off yesterday with test areas being switched on in the Gold Coast. Telstra has stated that it plans to add 200 more sites in key areas by the end of 2018.

But despite the impact that the nbn rollout has had on profits, Telstra continues to dominate the market with a total of 1,949,000 connections> this is an increase of 770,000 and has given Telstra a 52 per cent market share, excluding satellite.

On the mobile front, revenue increased 0.4 per cent to $10,145 million and retail customer services increased to 342,000 during the year — bringing the total to 17.7 million. Telstra now has 7.9 million postpaid handheld retail customer services, an increase of 304,000.

“We have seen strong subscriber growth, particularly in the second half of the year, adding 342,000 retail mobile customers, 88,000 retail fixed broadband customers and 135,000 retail bundles during FY18,” Mr Penn said.

But this doesn’t make up for the decline, and the telco expects this trend to continue and doubles down on T22 being the eventual answer to its problems.

“Despite this, the challenging trading conditions are expected to continue in FY19, including ongoing pressure on ARPU and further negative impact of the nbn network rollout on our 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 $3 billion strategic investment in Networks for the Future and digitising the company.”

You can find more information on Telstra’s 2018 financial results here.

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