Home Telecoms & NBN Telstra takes big hit to revenue, profits in 2017

Telstra takes big hit to revenue, profits in 2017

Telstra has seen a big drop in both its revenue and profits for the financial year 2017 compared to the previous year, according to full-year results released today.

Australia's biggest telco reported income of $28.2 billion, compared to $29.67 billion for the previous financial year, a drop of $1.46 billion or nearly 5%.

Profits fell by 32.7% compared to the previous year, with figures of $3.89 billion for 2017 as compared to $5.78 billion for the previous year, a drop of $1.89 billion.

Telstra chief executive Andy Penn claimed that the company had put in a strong performance. The downward trends were put down to discontinued businesses like Autohome.

As far as continuing operations were concerned, the figures painted a brighter picture, with income up 4.3% and EBITDA up 2% to $2.07 billion. The net profit after tax from continuing operations was up 1.1% to $3.9 billion; the same figure from both discontinued and continuing operations showed a fall of 33.8%.

telstra results

Telstra chief executive Andy Penn speaking at the announcement of the company's annual results on Thursday.

"We saw continued customer growth across key segments, with retail mobile net adds of 218,000, including 169,000 post-paidhandheld net adds, and 132,000 domestic retail fixed broadband customers," Penn said in a statement.

"NBN connections grew by 676,000 to 1,176,000 bringing total market share to 52% (ex-satellite). Almost 90% of our retail fixed broadband customers are now on a bundle, with224,000 adds on the back of the popular ‘Best Bundle Ever’ and ‘Hottest Entertainment Bundle’."

Penn said Telstra remained committed to Foxtel and "we continue discussions with our partner News Corp regarding the best arrangements and structure to support Foxtel's success into the future".

Last week, Foxtel was reported to have experienced a 2% drop in revenue to $3 billion because of lower subscriber numbers.

Penn said the market was evolving and new companies were entering the mobile and fixed markets, adding that there was pricing pressure in all sectors through price reductions, value enhancements and increased data allowances. 

"Digital disruption is continuing to accelerate, not justfor us but also for our customers, and we are entering a significant point in the transformation of the telecommunications market with the NBN rollout reaching scale," he said.

The latest entrant to the mobile market is TPG which paid $1.2 billion in May for two lots of 10MHz in the 700MHz spectrum auction, saying it planned to roll out a $600 million network.

Vodafone Australia has indicated that it will be entering the fixed-line broadband market in late 2017.

Penn said: "These changes confirm why we must increase the speed of our transformation. It is for this reason that last year we announced during FY17 our intention to invest up to $3 billion in additional capital expenditure over the next three years to achieve a further step change in our strategic positioning. 

"This is in addition to our usual capital spend and takes our expected total capital investment including spectrum over the three years to FY19 to more than $15 billion. To date we have focused the programme predominantly on the network and have invested around $750 million since November 2016.

"In FY17 we reduced our underlying fixed costs by $244 million, consistent with our announcement in November 2016 that we wouldachieve at least $1 billion in productivity by FY21. 

"We intend to accelerate our efforts to reduce costs even further over the next five years, bringing forward our $1 billion net productivity target by one year to FY20. We have increased our target by a further $500 million in cost savings and we plan to deliver more than $1.5 billion in net productivity by FY22. As previously advised, we expect the benefits to accrue roughly equally over the life of the programme."

Photos: courtesy Telstra

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.