Bushfires and the migration of customers to the NBN has sapped Telstra’s first half-profit, though the telco giant’s 7.6 per cent slide to $1.14 billion was in line with market expectations.
Telstra’s revenue for the six months to December 31 fell by 3.4 per cent to $12.2 billion as the company’s net profit slipped from $1.23 billion a year ago, including a $50 million hit from the summer’s fire crisis.
Telstra will, however, keep its interim dividend unchanged, delivering shareholders a fully franked 8.0 cents per share, inclusive of a special dividend of 3.0 cents.
Telstra has also reaffirmed the upgraded FY20 guidance it announced in September, when it flagged a slower than expected drain of broadband customers to the government-owned NBN.
The company’s stock jumped by as much as 1.31 per cent to $3.87 following the release of Thursday’s results, though the share price reversed direction as the session wore on.
By 1405 AEDT the company’s shares had slipped 1.7 per cent to $3.755.
Telstra’s stock had also slipped on Wednesday afternoon amid rumours a draft version of Mr Penn’s results address had been leaked.
The company confirmed on Wednesday evening this might have been the case, with an administration error to blame.
Chief executive Andy Penn said Telstra was making strong progress on its T22 transformation strategy, with underlying fixed costs dropping by $422 million, or 12.1 per cent over the half-year period.
Telstra said it had completed 6,900 of the 8,000 net job cuts flagged in June 2018, with 6,300 people having left the company during the past 18 months.
Total underlying fixed cost reductions have now hit about $1.6 billion since FY16.
“While (the results) reflect the headwinds we continue to face in the migration to the NBN, they also show we are starting to build positive underlying financial momentum,” he said in his address to investors on Thursday.
Telstra’s in-year NBN headwinds were about $360 million, with the company estimating it has now shouldered 60 per cent of the total NBN impact.
It maintains the hit from the NBN rollout will peak in FY21.
Mr Penn repeated his view that climate change would be the defining challenge of the decade.
“While it is popular to have an opinion on what others should be doing about climate, including government, what I am focused on is what we are doing as a company and personally as an individual,” he said.
Telstra’s retail customer services increased by 159,000 in the half, bringing the total to 18.5 million.
Mobile revenue increased by 0.3 per cent to $5.3 billion with growth in hardware partly offset by declines in postpaid handheld, prepaid handheld and mobile broadband.
Fixed revenue declined by 10.9 per cent to $2.4 billion, affected by NBN migration, competition and ongoing legacy decline.
NBN CONTINUES TO WEIGH ON TELSTRA
* Revenue down 3.4pct to $12.2b
* Net profit down 7.6pct to $1.14b
* Interim dividend held at 8.0 cents per share, fully franked, inclusive of a 3.0 cent special dividend.