Telstra profits higher than expected
Telstra, the country's largest telco, posts a net profit of $3.9 billion for the year ending June 2013, which is slightly higher than analyst expected.PT2M12S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2riwv 620 349 August 8, 2013
Telstra has delivered a 12.9 per cent rise in annual net profit on the back of strong growth in customer numbers.
The country’s largest telco posted a net profit of $3.9 billion for the year ending June 2013, compared with $3.4 billion a year earlier and slightly higher than analyst expectations of $3.76 billion.
The company added 1.2 million new mobile customers in the last year against background of a slowing mobile market with one of the highest mobile penetration rates in the world. Telstra has more than 15 million retail mobile customers on its network.
Telstra says it now has more than 15 million retail mobile customers. Photo: Peter Braig
Total revenue for the last financial was $26 billion, up 1.9 per cent compared with the same period last year, largely in line with the management’s guidance of growth in low single digit.
Mobile revenue grew 6 per cent during the period. That compares to the average of 8.9 per cent a year over the previous five years, according to data compiled by Bloomberg.
The company declared a steady fully-franked dividend of 28 cents per share for the year, keeping the payout at the same level it's been at since 2006.
“This is in line with our expectations, we didn’t expect any change to capital mange at this fiscal 2013 result given the potential changes in the NBN rollout should we have a change in government in the looming federal election," Morningstar analyst Michael Wu said. "In our view, a clearer picture post the election could see further commentary at the first half fiscal 2014 result."
Telstra’s dividend yield, a measure of the payout in relation to its share price, hit an eight-year low of 5.5 per cent in May as yield-chasing investors drove the stock higher.
The telco's shares gained 1 per cent to $5.05 in morning trade, bringing them within 10 cents of their multi-year highs from late May.
Telstra chief executive David Thodey said the strong mobile growth was on the back of the company’s renewed focus on customer services and continued investment in the network.
“We have been able to deliver the third consecutive year of significant customer growth as a result of our focus on improving customer service as well as continued investment in the network,” he said in a statement released this morning to the ASX.
Mr Thodey said Telstra would extend the 4G coverage to 85 per cent of the country by the end of this year.
Another bright spot in Telstra’s result is its Network Applications and Services portfolio, which includes cloud computing and data storage for corporate clients. The division’s profit increased 17.7 per cent to about $1.5 billion.
Mr Thodey indicated his intention to expand his fast-growing network application business to international markets.
Telstra’s fixed line business, especially its high margin copper network, continues its decline as more customers opt for mobile and voice over internet services. It lost more than 300,000 fixed line customers last year.
Revenues from fixed line division dropped by 2.7 per cent to $7.3 billion, down from $7.5 billion the previous year. The decline in revenues from the company’s aging but high margin copper network was offset by strong increase in demand for fixed broadband.
Telstra continues to be frustrated by uts play in the media after the company revealed a 20 per cent decline in print revenue from its Sensis directory business, which was once a cash cow.
The revenue decline from its legacy business was partially offset by a near 12-per cent increase in digital revenue.
“Sensis’s performance was in line with our expectations as the business continues the challenging journey of transitioning to a digital model,” Telstra chief financial officer Andy Penn said during an analyst briefing this morning.
Telstra’s international assets, especially Asian businesses performed strong last year and revenues were up 16.2 per cent to $1.7 billion. Incomes from Autohome, China’s largest online car sales website soared 73.8 per cent on the back of strong growth in the largest car market in the world.
The river of gold from Telstra’s $11 billion NBN agreement with the government also started to contribute to the telco’s bottom line. The company received about $400 million in NBN payment from Canberra.