Telecommunications giant, Telstra, has reported a $2.3 billion half-year profit - up 93.7 per cent on the same period last year.
Telstra said the result appears inflated due to the massive write-down the telco made in its Reach joint venture last year.
This year, the company said its cost reduction programme drove the positive results.
Total underlying expenses fell by 1.8 per cent.
Chief executive Officer Dr Ziggy Switkowski said the company was on track to take out the $800 million of costs over two or three years as predicted.
Telstra also hailed the growth of its mobile operations, which generated revenue growth of 6.4 per cent during the reporting period. Online subscribers grew 25 per cent thanks mostly to a 108 per cent increase in broadband connections.
Shadow minister for communications, Lindsay Tanner, had a different take on the result.
Tanner said that the result had been propped up by increases in Telstra’s line rental fees.
Following 10 per cent and 14 per cent increases in line rentals during 2002, line rental fees were increased by a further $1.60 under Government-legislated price control increases in July 2003.
“Telstra’s increased line rental costs have again brought home the bacon for Telstra as line rental revenues have increased by $54 million in just half a year, despite the number of Telstra rental lines decreasing marginally,” he said.
“Labor estimates that Telstra made around $130 million in previous line rental increases in 2002-03, even after slight reductions in call costs are taken into account.”
The ALP predicts Telstra will make $200 million extra in revenue in the current financial year from the two years of consecutive line rental increases.
“The Howard Government’s only Telstra policy is to fatten the company up for privatisation,” Tanner said.