- Telstra has announced its first half results, with revenue down by 10.4% and profit down by 2.2%.
- Having postponed 1,400 job cuts during the pandemic at an estimated cost of $100 million, the telco will now spend $180 million to restructure the company and eliminate a further 2,200 workers.
- It attributed a $170 million cost to the COVID-19 pandemic, up to $150 million in international roaming losses, and as much as $370 million to NBN payments.
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The Australian telco has revealed the cost of postponing job cuts throughout 2020 as it begins dusting off the chopping block again.
Announcing its first half results on Thursday, Telstra said it had cost $100 million to push back the 1,400 job cuts it had planned prior to the pandemic into this year.
While workers may be thankful for the extra time on the job however, the reprieve is short-lived. Telstra announced last month all of those jobs will go this year, with an additional 800 workers to be let go by year’s end.
The downsizing doesn’t come cheap either.
“With the increased cost-target and jobs announcement earlier this month, we expect around $180 million of restructuring costs in FY21,” CEO Andy Penn said as part of remarks to shareholders.
Penn himself has come under fire for overseeing the cuts while pocketing a pay-packet in the realm of $5 million.
Telstra records falling profit
On the results more broadly, first half revenue dropped 10.4% to $12 billion, and net profit fell more than 2% to $1.1 billion.
Penn directly attributed just $170 million of that loss to the pandemic, up to $150 million in lost international roaming revenue, while complaining that NBN payments would take a $370 million bite as well.
With the beleaguered national infrastructure project now declared to be finished however, Penn said the company was now at a turning point.
“For the last 4 years, every year, we have had to face the confronting challenge of the financial headwinds which arise from the transfer of a material part of our business to the NBN,” he said.
“This has been occurring in a market where competition has led to material reductions in both fixed and mobile ARPUs as well as technology disruption and significant structural change across the industry.”
“In many ways it was these dynamics that provoked our T22 strategy that we announced almost three years ago. It was these dynamics, in conjunction with a conviction about how technology innovation was going to continue to accelerate, that led us to understand that we needed to radically transform.”
However its troubles may not be behind it just yet. IBISWorld senior industry analyst Liam Harrison said he expects further revenue declines for the remainder of the year.
Harrison added however that the competition watchdog’s delay of the TPG-Vodafone merger had also bought the dominant player some vital time in the competitive telco market.
“The ACCC’s attempt to block the TPG-Vodafone merger has significantly delayed the synergies that TPG would gain from the merger, allowing Telstra to more easily respond to the threat of the newly merged company,” Harrison said.
Announcing an undiminished fully-franked dividend of 8 cents per share, Telstra was trading up more than 2% in early trade.
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