Telstra financial results: more bacon, less fat

Renai LeMay
11 February 2010, 12:30 PM

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Telstra today unveiled a muted set of half-yearly financial results, with revenue and earnings both slightly down, but free cash flow showing a spike upwards.

According to statements issued to the Australian Securities Exchange this morning ahead of the company’s results briefing in Sydney, Telstra’s total revenue for the period sank 2.9 per cent compared with the same six months to the end of 2008. Total sales revenue was $12.34 billion.

Earnings before interest, depreciation, amortisation and taxation (EBITDA) were also down by 0.3 per cent to $5.32 billion, although once the sales of the company’s IT services business KAZ to Fujitsu last year was taken out of the equation along with currency movements, EBITDA looked a little better, 0.2 per cent up.

But the real winner in the results was Telstra’s free cash flow, which jumped from $1.91 billion in the half to the end of 2008 to $2.62 billion at the end of 2009 – a figure 37 per cent up.

The company said it was experiencing “challenging market conditions”, with revenue from its traditional fixed-line telephony business (the public switched telephony network or PSTN) dropping by $222 million compared with the previous corresponding period.

The “PSTN headwinds have increased,” the company said in its management presentation. Revenue from advertising and Telstra’s directories business (contained within Sensis) was also down by $53 million.

Revenue from mobile services, however, was growing strongly – up $145 million, as the telco continued to capitalise on its leadership in the field with its Next G network.

The amount of people signing up for new broadband connections on Telstra’s network was also decreasing, with the telco saying the fixed broadband market was “maturing”. However, the number of mobile-only households – households without a fixed connection at all – was growing rapidly each six months.

In terms of guidance for the 2010 financial year as a whole, Telstra said it expected a low single digit decline in total sales revenue, with EBITDA growth set to experience low single digit growth.

With regards to its ongoing negotiations with the Federal Government and the National Broadband Network Company regarding the NBN, Telstra said only in its briefing document that the talks “continue”.

Further coverage throughout the day.

_Delimiter

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Tin (Regular user):

"with the telco saying the fixed broadband market was “maturing”"

Or perhaps people are wising up and not being sucked into Telstra fraudband.

"However, the number of mobile-only households – households without a fixed connection at all – was growing rapidly each six months."

Oh, I see. Telstra's worked out how to rip them off more efficiently.
Seriously, we get at least 2 people a week come into our shop with a problem with NextG, and about 1/4 of them are complaining it's a rip off and now they're stuck on a 2 year contract.

11 February 2010, 2:18 PM (2 years ago)report abuse Send to a friend

petert (Cornerstone member):

It is a pity that someone did not rightly note that Telstra is paying the penalty for having engaged Sol Trujillo. It is hard to imagine a more divisive person in the Australian telecomm's industry.

11 February 2010, 2:30 PM (2 years ago)report abuse Send to a friend

Dan Warne (Regular user):

Totally agree... his modus operandi was to destroy relationships, insult customers and try to foist US-style conditions on Australian customers (three year minimum contract terms, etc.)

11 February 2010, 3:13 PM (2 years ago)report abuse Send to a friend

Raindog (User):

Quoting petert:
It is a pity that someone did not rightly note that Telstra is paying the penalty for having engaged Sol Trujillo.

As much as Trujillo and the amigos did more damage than the vandals, The arrogance towards customers by Telstra has existed since they were the PMG. Trujillo was the equivalent of putting out fires with gasoline.

To be fair to Telstra under the new management they have shown signs of improvement, but a few signs of improvement is a whole chasm away from repairing the woes that are Telstra. And of course the same people that were silly enough to entertain the folly that was Trujillo are still the ones pulling the strings on the Telstra board of directors.

Telstra customer service varies from woeful to non-existent. All the spin and public announcement in the world won't fix the woes of open ended billing, selective provision of services, and arrogance towards customers.

The poor results are a reflection of the customer exodus to alternatives and a result of the perpetual holding pattern Conroy has forced the entire industry into.

11 February 2010, 4:33 PM (2 years ago)report abuse Send to a friend

Telstramustdie (New user):

This dinasour is dead - anyone who has had to deal with any level of their telephone customer service (loosest interpretation of the word service used here) can see that from a million miles away. If you are a shareholder abandon ship now before all is lost.

11 February 2010, 2:59 PM (2 years ago)report abuse Send to a friend

CCCMikey (New user):

It didn't have to be this way. They choose to ignore VoIP and overpriced line rentals at their peril. As more people get used to 10 cents per call rather than $3 caps after 10 minutes; and realise that HomeLine Ultimate doesn't do much for mobile calls, they'll leave.

When people realise they can get 2mbps up and down and 5GB for about the same as they pay just for line rental, they'll change. (Heavy users excepted of course.)

When they realise there are mobile plans out there at 8 cents a minute, they'll say bye to the landline.

In so many things, Telstra is between four and ten times the price of their competitors, often with less performance, then they'll change.

14 February 2010, 12:05 AM (2 years ago)report abuse Send to a friend

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