Telstra beat expectations with $4.3 billion profit

Posted on August 14, 2014 10:38 am

Telstra shares rose to a 12-year high gaining 1 per cent to $5.05 in morning trade after Australia’s largest telco today reported a 14.6 percent jump in net profit to $4.3 billion and an increase of 937,000 mobile customers, which pushed its total mobile base to 16 million for the full year to June 30. The telco said it will use recent earnings from high-profile divestments to purchase back up to $1 billion worth of shares, just one of several boons for shareholders from the telco’s full-year results, which also saw profit and final dividend rise.The growth in mobile users propelled mobile revenue five percent to $9.7 billion. Telstra’s overall revenue also increased 3.5 percent to $25.3 billion. Apart from the addition of 937,000 domestic retail mobile users, there were 183,000 new fixed retail data services.The income Telstra receives from the national broadband network agreements rose from $399 million in the last financial year to $640 million – a result of completion of the transit network build and duct rental and income from lead-in sales driven by the rollout. Telstra’s 4G customer base grew to 5.2 million over the last year mostly made up of mostly handset users on a network which the telco said now covers 87 percent of the Australian population.

Telstra has also hinted it will invest a further $1 billion into the network in the 2015 financial year. The revenue growth was attributed to strong performances in Telstra’s mobiles, network application and services business. Individual revenues for fixed, media, data and IP businesses fell.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. 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 while 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. 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 and the 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.

Contador Harrison