Telstra reveals decline in first half profit as fixed line numbers continue to fall

11 Feb 2010

Australia’s dominant fixed line operator Telstra has posted a 3.3% year-on-year decline in net profit for the first half of its 2009-10 financial year. In the six months ended 31 December 2009 Telstra generated a net profit of AUD1.85 billion (USD1.62 billion), down from the AUD1.92 billion it reported in the same period a year earlier as fixed to mobile substitution continued apace, coupled with increased competition in the wireless voice sector for its mobile subsidiary Telstra Mobile. Sales revenue for the six-month period fell by 2.5% y-o-y to AUD12.32 billion, with revenue from the operator’s PSTN services falling by AUD222 million compared to the corresponding period a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile were down 0.3% against 1H2008-09 at AUD5.32 billion. Commenting on the results, Telstra CEO David Thodey said: ‘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 behaviours and stronger price competition.’

As of December 2009 Telstra had a total of 8.8 million PSTN subscribers, of which 7.55 million were residential customers. This represents a decline of 3.9% year-on-year. Fixed line retail broadband subscriber numbers have also continued to fall, with Telstra reporting a total of 2.24 million at end-2009, down 2.3% against end-2008. An increase in wholesale fixed line broadband lines helped offset the decline somewhat however; at 31 December 2009 Telstra had 1.73 million wholesale broadband lines in operation, up 2.7% against the 1.68 million a year previously. Mobile subscriber numbers have continued to climb, although the pace of growth has fallen behind that of Telstra’s rivals, including Optus. As of December 2009 Telstra Mobile claimed 10.39 million mobile voice sign-ups, up 7% y-o-y, of which 7.25 million had taken 3G services, up 38.2% compared to the 5.25 million third-generation customers the operator had at end-2008.

Australia, Telstra (incl. Belong), Telstra Mobile