Telstra Holds Dividend Despite NBN Headwinds

Telstra has kept its half-year dividend steady at 8 cents a share despite profits being hit by bushfires and the ongoing rollout of the national broadband network (NBN).

The company also Thursday re-confirmed guidance with full-year total income – excluding financial income – between $25.3 to $27.3 billion, and underlying earnings before interest tax depreciation and amortisation (EBITDA) to be between $7.4 and $7.9 billion.

For the six months to December Telstra reported a $1.14 billion net profit, down 7.6% from the same period a year ago. Revenue dipped nearly 3% to $13.4 billion. The results were in line with full-year guidance from the company.

“This year we will reach the half-way point of our T22 strategy and we have built good momentum in delivering for our customers, our employees and our shareholders,” chief executive Andy Penn said in a statement with the results.

“We know that there is more work to do and we still face challenges within our business and across the telecommunications sector.”

“Our resolve is to focus on the things that are within our control and it’s particularly pleasing to see a continued strong performance on reducing our costs and delivering new and simplified products and services to our customers.”

Mr. Penn said the bushfires had impacted the business and customers and NBN headwinds had affected the business, revealing one-off costs related to the fires of around $10 million in the half.

The costs included assistance to customers, refunds and donations. The total impact of the bushfires is estimated to be $50 million.

Fixed revenue declined by 10.9% to $2.38 billion, hit by the migration of consumer accounts to the NBN and continuing intense competition in the market.

Mobile revenue edged up 0.3% to $5.31 billion. The company added 137,000 retail postpaid mobile services, including 91,000 from its Belong service.

Media revenue was hit by the performance of Foxtel from Telstra. Foxtel from Telstra saw a 5% fall in revenue to $323 million and had 52,000 subscriber exits in the half.

Telstra said it now has 1.625 million Telstra TV devices in the market, while Sports Live Pass users increased by 602,000 to 3.194 million across AFL, NRL, netball, and soccer.

The results and commentary were issued before the Federal Court yesterday opened the way for TPG and Vodafone Australia to merge (subject to any appeal from the ACCC).

That will make life tougher for Telstra in its only growth segment, mobiles, with the expensive 5G extension underway.

Despite that news, Telstra shares rose 1.3% to $3.76.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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