Correspondents in Sydney | August 13, 2008
update TELSTRA has posted a 13.3 per cent rise in annual profit, after its broadband and mobile revenue lifted and the telco slowed declines in its traditional fixed line earnings.
Australia's biggest telecommunications company bettered its guidance for revenue growth while its underlying earnings improve was at the top end of its forecast.It has also pointed to further growth in the new financial year as it continues to build on its rising share of the broadband and mobile markets.
Telstra's bottom line net profit for 2007/08 was $3.71 billion, up from $3.28 billion in the previous year.
Underlying profit, or earnings before interest and tax (EBIT) rose 7.7 per cent to $6.23 billion, compared to forecast growth of six to eight per cent.
Revenue increased by 4.7 per cent to $24.828 billion, bettering guidance of three to four per cent growth.
"Telstra's turnaround continues to gain momentum on all fronts with our fiscal year guidance met or exceeded for the third consecutive year," chief executive Sol Trujillo said in a statement.
"We have redefined our business by investing to create competitive advantages and this value differentiation strategy, underpinned by our customer-centric transformation, sets us apart."
Telstra forecast revenue growth of three to four per cent in 2008/09, and said it was on track to achieve its target of $6 billion to $7 billion in free cash flow in 2010, subject to regulatory outcomes.
The cash will support a potential five-year national broadband network roll-out and also give the company flexibility to consider greater returns to shareholders and acquisitions, Telstra said.
Telstra also forecast EBIT for this financial year to again grow by between six per cent and eight per cent.
In 2007/08, Telstra's EBITDA grew 5.6 per cent to $10.42 billion, exceeding the company's forecast of between four per cent and five per cent.
It has forecast EBITDA for this year to grow between six per cent and seven per cent.
"Telstra's networks, products and services offer clear advantages over our competitors, a fact reflected in increased broadband and mobile revenue market shares," Mr Trujillo said.
He said Telstra had halved churn in its retail PSTN, or fixed line, business since the end of 2005 and had more than doubled revenue growth rates in IP and data access since the launch of its Next G network.
During the year, retail broadband revenue grew by 49 per cent to $1.8 billion, as market share and average revenue per user (ARPU) increased.
Mobile services revenue rose 12.3 per cent to $5.5 billion.
"Our Next G network investment has accelerated mobiles growth, delivering double-digit growth for the third consecutive half and continuing our stand-out performance as customers see the value of our superior mobile offerings," Mr Trujillo said.
Fixed line, or PSTN, revenue was $6.7 billion, down 3.2 per cent, as Telstra lost wholesale revenue to competitors through unconditioned local loop (ULL) services.
But the decline was better than the 4.4 per cent fall recorded in 2006/07.
Telstra said it had moved 3.3 million customers and 4.3 million services to its new IT platform as part of its five year transformation program, which it is more than half way through.
However, this missed its objective of moving five million customers to the new platform by June.
Meanwhile, Telstra also updated its financial objectives for its transformation to 2010.
It is now targeting a compound average growth rate for revenue between fiscal 2005 and fiscal 2010 of three per cent to four per cent, up from two to three per cent.
Compound average growth for operating expenditure over those years will be between four per cent and five per cent, up from two per cent to three per cent.
Its new growth target before interest, tax, depreciation and amortisation is three per cent to 3.5 per cent, up from 2.5 per cent to three per cent.
In 2007/08, Telstra's expenses increased 3.3 per cent to $18.8 billion as the costs related to the IT component of the transformation peaked.
The company declared a final dividend of 14 cents a share, taking the full year payout to 28 cents, in line with the previous year.
AAP