Telstra has cut guidance because of slow NBN rollout

Torsten Blackwood/AFP/Getty Images
  • Telstra has cut 2019 guidance due to updated forecasts showing fewer premises will be ready for NBN than expected.
  • Guidance unchanged outside updated NBN rollout assumptions.
  • Revenue is now forecast to be lower by about $300 million.

Telstra has cut its revenue and earnings guidance for 2019 due to a slower than expected roll out of the NBN.

Overall revenue will fall by about $300 million and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) by $100 billion.

Telstra called the guidance reductions “modest”.

At the close, Telstra shares were up 3.3% to $3.12.

Australia’s biggest telco says the number of premises ready-for-service and those activated for NBN are now lower than previously estimated.

This has the effect of deferring receipts from NBN, partly offset lower connection costs.

“While the lower volumes impact Telstra’s outlook for FY19, it is anticipated these changes will be financially positive to Telstra over the full rollout,” says Telstra.

Guidance for total income is now $26.2 billion to $28.1 billion, down from $26.5 billion to $28.4 billion.

The guidance changes:

Source: Telstra

The guidance changes take into account the NBN’s latest Corporate Plan released last month.

NBN forecasts show 2019 will be the biggest year for construction with an additional 2.7 million premises to be declared Ready to Connect.

By the end of 2019, more than 80% of Australian homes and businesses are forecast to be Ready to Connect to a service over the network.

Another 1.9 million homes are projected be added to the footprint in the NBN network’s final year of construction in 2020.

Telstra last month posted a 8.9% drop in full year profit to $3.53 billion as Australia’s biggest telco faces a unique challenge is the roll-out of the nbn network, shrinking margins in the fixed-line market, and increasing competition in the mobile market.

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