Telstra profit grows 10%, but challenges ahead

Dylan Bushell-Embling
14 Aug 2009

Telstra said its net profit grew 10.3% during the year ending in July, but warned of a difficult year ahead.

The company recorded a net income of A$4.1 billion ($3.4 billion). Revenue grew 2.7% to A$25.5 billion, with Telstra's mobile and broadband units performing particularly strongly.

Mobile services revenue rose 8.7%, with wireless broadband revenue increasing 69.2% to A$587 million. Fixed broadband revenue jumped 15.9% to A$1.53 billion.

But Ovum said the result was disappointing. “It is now clear [that the] benefits of Telstra’s five-year transformation program will be slower to flow through to the bottom line than originally envisioned,” analyst Nathan Burley said.

And new CEO David Thodey warned that the company was not immune to the global economic downturn. “We continue to experience reduced usage of both fixed-line and mobile voice usage, while there is evidence of slowing customer growth in fixed broadband take up,” he said.

And the company faces “significant challenges” in the coming year, Thodey warned.

“We expect an extended period of slow growth [and] competition remains intense,” he said. “But we will continue to invest in networks and services that will differentiate our offerings and deliver value to our customers.”

hodey also said Telstra would continue to negotiate with the federal government over the National Broadband Network project. “We are working to find the right way to deliver the objective of a world-class communications infrastructure for Australia, while protecting Telstra shareholders.”

Telstra told investors it expects to see low-single digit revenue growth, with ebitda margins in line with this year's results.

Telstra stock slipped 1.4% to A$3.56 yesterday.

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