Telstra expects $2.36b ebitda hit from NBN
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Shares in Australia’s Telstra slumped 10.6% to a five-year low of A$3.87 yesterday after the company warned it expects to take an A$3 billion ($2.36 billion) hit to its ebtida as a result of the rollout of the National Broadband Network (NBN).
Telstra cut its planned dividend for the current financial year by 29% to A$0.22 per share after revealing that it expects the impact of the NBN rollout to be at the top end of its projected $2 billion to $3 billion ebitda decline.
The incumbent operator announced the plan along with its financial results for the 12 months ending in June. Revenue for the year grew 4.3% to A$28.2 billion.
Net profit fell 33.8% to A$3.9 billion, but excluding the impact of the sale of its Autohome Chinese classifieds business for A$2.1 billion to Ping An Insurance Group in the prior year, profit from continuing operations grew 1.1%.
Telstra reported mobile net additions of 218,000 and domestic retail fixed broadband net additions of 132,000 during the year. Customers served by Telstra over the NBN meanwhile more than doubled to 1.18 million, representing a total market share of 52% of the non-satellite services over the national wholesale network.
But Telstra CEO Andrew Penn said the company is facing competitive pressures in both the mobile and fixed segments, including the introduction of new rivals in both.
“Digital disruption is continuing to accelerate, not just for 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,” Telstra CEO Andrew Penn said.
“It is against the backdrop of these market dynamics that we announced during the year our intention to invest up to A$3 billion over the next three years to achieve a further step change in our strategic positioning to deliver economic benefits of more than A$500 million of ebitda by 2021.”
Telstra also plans to bring forward its target of achieving A$1 billion in efficiencies by FY21 and seek to deliver more than A$1.5 billion in net productivity gains by FY22.
Questions & Answers
Q.What is the primary reason for Telstra's expected large ebitda hit?
What is the primary reason for Telstra's expected large ebitda hit?
Telstra expects to take an A$3 billion ($2.36 billion) hit to its ebitda as a result of the rollout of the National Broadband Network (NBN). This impact is at the top end of its projected decline.
Q.How much has Telstra's dividend been reduced for the current financial year?
How much has Telstra's dividend been reduced for the current financial year?
Telstra cut its planned dividend for the current financial year by 29%. The new dividend amount is A$0.22 per share, announced alongside its annual financial results.
Q.What financial performance did Telstra report for the last year, excluding the Autohome sale?
What financial performance did Telstra report for the last year, excluding the Autohome sale?
Excluding the A$2.1 billion sale of Autohome in the prior year, Telstra's profit from continuing operations grew by 1.1%. Overall net profit fell 33.8% to A$3.9 billion.
Q.What strategic actions does Telstra plan to take to improve its financial position?
What strategic actions does Telstra plan to take to improve its financial position?
Telstra intends to invest up to A$3 billion over the next three years to improve its strategic positioning, aiming for over A$500 million in ebitda benefits by 2021. It also plans to achieve A$1.5 billion in net productivity gains by FY22.
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