Telstra beats growth targets a year ahead of schedule

10 Feb 2005

Australia’s dominant telecoms operator Telstra has announced that it has hit its target revenue growth rate more than a year ahead of schedule. The company said first-half revenues were up 5.1% to AUD11.38 billion (USD8.8 billion), bettering its target of achieving 4% growth by mid-2006. Net profits rose by 1.9% to AUD2.34 billion.

There was a particularly strong performance at Telstra’s mobile unit, with sales up 8.7% to AUD1.9 billion and market share levels stable compared with last year. The operator had 7,983,000 cellular subscribers at the end of 2004, up from 6,985,000 twelve months before, and passed the eight million-mark in January. The news was not all good, however, as increasing competition and rising churn levels saw fixed line revenues fall by 1.85% to AUD3.97 billion.

Outgoing chief executive, Ziggy Switkowski, said: ‘This was our best half for many years,’ adding, ‘The Australian telecoms industry is healthy and growing, and overall profitability is improving everywhere, even if the sector remains intensely competitive.’ Although Dr. Switkowski admitted he was ‘surprised’ at the levels of growth in the mobile sector, he predicted ‘another big year’ for Telstra’s wireless unit.

Broadband internet services also had a successful first half, with broadband customer numbers reaching 1.23 million by the end of 2004, up 142% on the end-2003 figure. Telstra says broadband internet penetration levels now stand at above 20%. The company has dismissed claims that its BigPond internet unit is using its size and Telstra’s connections within the Australian media industry to shoulder aside smaller competitors. Critics also suggest that the incumbent’s rising sales figures are a product of ever-increasing fees such as line rental charges, which have risen from AUD11.65 a month in 2000 to around AUD29.00 a month in 2004.

The Australian government is expected to introduce legislation later this year which will pave the way for the eventual sale of the state’s controlling stake in Telstra, which is valued at around AUD30 billion. If the stake is offloaded in one transaction it would rank among the world’s largest ever share placements.

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