Telstra's full year profit is down 9%

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  • Telstra’s total income increased 3% to $29 billion
  • Net profit after tax fell 8.9% to $3.5 billion.
  • The company declared a fully franked final dividend of 11 cents a share.

Telstra full year profit fell 8.9% to $3.53 billion as Australia’s biggest telco faces “times of enormous challenge and change”.

Revenue was flat and total income was just 3% higher at $29.04 billion. The telco expects revenue to shrink further this year.

In restructuring, Telstra cut underlying core fixed costs by 7% or $480 million

Telstra says the unique challenge is the roll-out of the nbn network, shrinking margins in the fixed-line market, and increasing competition in the mobile market

“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,” the chairman, John Mullen, and CEO Andrew Penn, say in a note to shareholders.

“We are determined to meet the challenges we face, and to continue to lead in the market, just as we have always done.”

In 2019, Telstra expects income to be weaker than 2019, in the range of $26.5 to $28.4 billion.

In early trade, Telstra shares were up 4% to $3.01.

CEO Andrew Penn says the 2018 cresults show strong customer growth for the year and good progress on Telstra’s productivity program.

“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,” says Penn.

“Despite this, the challenging trading conditions are expected to continue in FY19, including ongoing pressure on ARPU (average revenue per user)and further negative impact of the nbn network roll-out 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.”

The company declared a fully franked final dividend of 11 cents a share, made up of a final ordinary dividend of 7.5 cents and a special dividend of 3.5 cents.

The total dividend for 2018 is 22 cents per share.

Telstra’s 2018 results:

Source: Telstra

Mobile revenue increased by 0.4% to $10,145 million. Retail customer services increased by 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.

Fixed line revenue fell by 9.2% to $5,812 million, impacted by nbn migration, competition and improved retail bundle momentum. Retail fixed voice subscriber numbers fell by 472,000. There were 88,000 retail fixed data net subscriber additions, bringing total retail fixed data customers to 3.6 million.

Retail bundles continued to perform well with net subscriber additions of 135,000, boosted by the launch of Unlimited Data Bundles and the new Telstra TV in October 2017. Improved momentum in the second half with 78,000 net subscriber additions compared with 57,000 in the first six months. There are now 3.1 million customers on a bundled plan, or 91% of the retail fixed data customer base.

Telstra says it continues to lead the nbn market with a total of 1,946,000 nbn connections, an increase of 770,000. nbn market share is 51%, excluding satellite.

Penn says the telco’s new strategy builds on the foundation provided by Telstra’s up to $3 billion investment in creating the Networks for the Future and digitising the business.

Telstra is on track to realise the benefits of the investment program, with $1.8 billion invested so far, including $1.5 billion in Networks for the Future as the company prepares for the launch of 5G, and $300 million on digitisation.

Mr Penn says this has enabled Telstra to grow the competitive differentiation provided by its network superiority and reliability.

“Our ongoing strategic investment in the performance of our mobile and fixed networks for our customers has been recognised by a number of key industry benchmarks,” he dsays.

“We were ranked number one on the Netflix Speed Index in July 2018 and also became the first Australian provider to win both the fixed and mobile Ookla fastest networks for Q1-Q2 2018.

“We also continued to make significant progress in preparing for the commercial launch of 5G, which is central to Telstra’s network investment strategy, through a number of major milestones.”

Telstra yesterday announced it had switched on 5G technology across selected areas of the Gold Coast.

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