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Struggling from falling mobile phone sales, Telstra revenues have fallen to $12.34 billion, from $12.71 billion in the first half of fiscal 2009. The phone carrier is still confident that conditions will improve in the second half, after posting a fall in net profit to $1.85 billion, which is down 3.3 per cent on the previous period.Telstra said it was “facing challenges on a number of fronts”, including strong domestic competition, an accelerated move to wireless-only homes, tough operating conditions in Hong Kong and a strong Australian dollar.

“In the second half of the fiscal year we believe that we will see an improvement in a number of these dynamics,” Telstra said in a statement.

“However, continued domestic price competition and currency strength continue to present challenges for us.

Chief Executive Officer David Thodey said free cash flow increased by $708 million to $2,619 million for the first half of fiscal 2010, and that the company is on track to achieve its target of $6 billion of free cash flow by the end of fiscal 2010, although it now expects a low single digit decline in reported sales revenue for the year.

“Telstra has largely completed its major investments in new networks and operating systems. It is now crucial that we generate returns that reward our shareholders.  We are pleased to report that our shareholders will receive a fully franked interim dividend of 14 cents per share for the half year,” Mr Thodey said.
 
Mr Thodey said the competitive challenges highlighted at the company’s annual investor update in October remained, with an increase in the rate of decline in fixed products and a further slowing in the take-up of fixed broadband.  He said a strong Australian dollar continued to affect revenue from overseas subsidiaries.
 
“Overall, we have seen a decline in adjusted revenues in the first half despite good performances in mobile data, wireless broadband and IP data. This reflects challenging market conditions due to changing calling behaviors and stronger price competition.”

“These market trends are reflected in our current expectations for a low single digit decline in reported sales revenue in the business for full fiscal 2010 versus flattish previously.”

Telstra will pay an interim dividend of 14 cents, in line with last year.

The telco says it expects low single digit growth in earnings before interest, tax, depreciation and amortisation (EBITDA), with its EBITDA margin to be maintained.

Telstra said it was on track to achieve a $6 billion free cash flow for the full 2010 financial year.

 

 

With regard to its negotiations with the federal government over the national broadband network (NBN), Telstra said it remained “engaged in constructive talks with the government and NBN Co.”

“We remain committed to try to find a mutually acceptable outcome, but the path ahead remains immensely complex,” the company said

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