Telstra profits are flat as expenses rise

Andy Penn, the new CEO of Telstra. Robert Prezioso/Getty Images

Telstra is winning more mobile phone customers and boosting revenue but has posted a flat 0.4% rise in net profit to $2.093 billion for the half year to December.

Total income was up 9.1% to $14.194 billion while Australia’s largest telco added another 235,000 domestic retail mobile services for a total of 16.9 million.

“Our results have been achieved against increased mobile competition,” says CEO Andrew Penn.

“We are actively working to simplify our business, drive down costs and help our customers experience what technology can do for their lives and businesses.”

Mobile revenue increased 3.7% to $5.5 billion.

Overall revenue from Telstra’s fixed business fell 1.5% to $3.6 billion, while fixed data revenue grew 6.7% to $1.3 billion and the decline of fixed voice revenue was contained to 7.6%.

Operating expenses increased 14.2% to $8.8 billion, mainly due to spending on new growth businesses, including the Asia-based Pacnet, and sales costs directly associated with revenue and customer growth in core businesses.

Penn says fixed costs were down $40 million or 1.1% for the half, when adjusting for significant transactions and events.

He says Telstra is on track with its productivity program, with a renewed focus on fixed costs.

“We are committed to improving productivity,” he says. “We are on track to reduce our full year fixed costs on a year on year basis.”

Telstra expects to deliver mid-single digit income growth and low-single digit earnings growth.

A fully franked interim dividend of 15.5 cents a share was declared, a rise of 3.3% on the same period last year.