Telstra net profit falls $35 million

Telstra net profit falls $35 million

Telco blames competition and harder market conditions for drop in revenue and profit

Telstra's David Thodey

Telstra's David Thodey

Telstra’s (ASX:TLS) profits for the six months ending December 31, 2009, fell from $1.92 billion a year ago to $1.85bn.

In a statement released with the telco’s half-yearly results, Telstra CEO, David Thodey, was keen to blame a more difficult market and tough competition.

“We have seen a decline in adjusted revenues in the first-half despite good performances in mobile data, wireless broadband and IP data. This reflects challenging market conditions due to changing calling behaviours and stronger price competition,” he stated.

Sales revenue also declined $321 million to $12.32bn, while pre-tax profit fell $17m to $5.31 billion. While the $0.14 per share dividend is unchanged from a year ago, some analysts were expecting $0.15 per share.

Although Telstra expects to hit its target of $6bn of free cash flow by the end of the financial year 2009/2010, it also warned the market to expect “low single-digit decline in reported sales revenue for the year”.

“Telstra will continue to invest in new products and services and improved customer service so we can return to revenue growth, and regain the market share that we have lost in this half,” Thodey said.

The results come amid discussions between the Government and Telstra on the issue of legislated separation and the National Broadband Network (NBN).

“The path ahead remains immensely complex,” Thodey said. “Throughout these talks, the best interests of our investors, our employees and our customers have remained paramount.

"There must be 15 major areas we have to consider and you have to have them all aligned before you can come to a conclusion...I am not going to be driven into a short-term decision. You could miss one thing and it could have a massive impact on the business."

Telstra’s results also follow a report released last week by the Australian National Audit Office, which claimed $30m was wasted on a failed NBN tender program partly because the Government ignored warnings it wouldn’t be viable without Telstra.

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Tags TelstraAustralian National Audit Office (ANAO)


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