Help – Telstra decline continues; profits down 10% and fixed lines falling

9 Feb 2006

Australian incumbent Telstra failed to halt a worrying decline in earnings as profits for the telco’s fiscal first half of the year fell 10.3% due to its weakening grip on the fixed line market. EBITDA for the six months ending 31 December 2005 declined by 7% to AUD3.5 billion (USD2.59 billion), with profit after tax shrinking by AUD245 million to AUD2.14 billion. Revenues from PSTN products fell by 7.6% as further migration to mobiles and the internet ate into sales. Telstra said it lost 180,000 retail lines in the period, of which 80,000 churned to wholesale. The incumbent, desperately looking to cling onto revenues, is currently engaged in a dispute with regulators and rivals over its Strategic Plan, and the tariffs it charges for wholesale access to the PSTN in particular. ‘The trends of decelerating revenue growth, PSTN erosion and accelerating costs so evident in the second half of fiscal 2005 have continued,’ Telstra CEO Sol Trujillo, said in a statement. ‘We are hard at work rebuilding the company and we are making progress on the strategic plan announced on 15 November 2005, but it will take time to have a significant impact on our figures.’

On a more positive note internet and IP services revenue grew 42.3% to AUD888 million, driven by broadband revenue growth of AUD225 million. Total broadband subscribers reached 2.3 million, as Telstra added 317,000 retail subscribers in the period. Total mobile goods and services revenues, including wholesale mobiles, was up 4.6% to AUD2.5 billion, as Telstra added 345,000 mobile users to take its total base to 8.6 million.

Australia, Telstra (incl. Belong), Telstra Mobile