Thursday, August 16, 2018

Telstra posts declining profitability, impact from nbn

Telstra reported flat  FY18 revenue of AU$26 billion, with EBITDA declining by 5.2 percent to AU$10.1 billion. Net profit was AU$3.5 billion, down by 9 percent from AU$3.9 billion in FY17.

The company attributed its declining profit to the National Broadband Network (nbn) and mobile competition.

Telstra CEO Andrew Penn said the results showed strong customer growth for the year and good progress on Telstra’s productivity program, however, the continued downward pressure on EBITDA and NPAT caused by the further rollout of the nbn and lower Average Revenue per User (ARPU) clearly reinforced the importance of the T22 strategy.

“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,” Penn said. “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.

Some highlights for the first half of the year

  • Mobile net adds - 235,000 retail mobile customers including 130,000 postpaid handheld; churn 10.9%
  • 21,000 Belong mobile; +118,000 wholesale mobile customers
  • underlying core fixed costs declined 7.2% 
  • Fixed EBITDA (ex nbn C2C1)-29% negatively impacted by growing nbn network payments and loss of wholesale margins. 
  • nbn impact in period $370m; $870m life to date 
  • >1m Telstra TVs
  • >1.5m AFL, NRL, Netball Telstra Live Sports Pass users
  • New nbn connections +454,000 (market share 51%, ex- satellite); retail bundle adds +57,000
  • Mobile service revenue -1.2% with post-paid 
  • handheld ARPU -2.9%
  • Global connectivity revenue +6.7% (LC)



See also