Telstra 1H profit shrinks 36%

Dylan Bushell-Embling
10 Feb 2011

Australia's Telstra said its half-year profit fell 36% due to increased spending on improving customer service and continued fixed-line leakage.

The company reported a profit of A$1.2 billion for the half-year ending in December. Revenue fell 0.5% to $12.2 billion, but this was a smaller swing than the 2.5% decline from the same period of 2009.

Operating expenses soared nearly 11% to $7.8 billion, as the company continued its strategy of spending big to improve customer service and try to reverse the negative perceptions held by some Australian consumers.

Earnings potential was also impaired by an 8.4% decline in PSTN revenue. Local calls fell 14%, and national long distance minutes by 9.3%. The company lost around 109,000 lines, or 3.3% of its remaining fixed voice customer base.

But at the same time, fixed broadband customers grew by 139,000, with annualized fixed broadband churn declining to 16.4% from 25.1%.

Mobile service revenue grew 6.5% to $3.4 billion, with the company adding 919,000 customers to bring the total to 11.5 million. Of these, 6.1 million were more lucrative postpaid customers.

Postpaid ARPU, however, fell 22.9% year-on-year to $41.53, and overall mobile ebitda margins fell five percentage points to 29%.

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