Telstra cites impact of NBN as it reports revenue, EBITDA and profit drops for FY19

15 Aug 2019

Australia’s Telstra has published its full year results for the twelve months ended 30 June 2019, reporting declines in turnover, EBITDA and net profit, attributable to the ‘impact of the [National Broadband Network]’.

For the year under review Telstra generated a total turnover of AUD27.81 billion (USD18.8 billion), representing a 3.6% year-on-year decline, of which the largest portion – AUD10.55 billion, up from AUD10.38 billion – was generated by its mobile operations. While Telstra also reported a 22.1% y-o-y increase in revenue stemming from recurring NBN-related services, which stood at AUD784 million, its other fixed line service revenues fell by 9.3% y-o-y to AUD5.23 billion.

EBITDA for FY 2019 was, meanwhile, down 21.7% against the previous fiscal year, at AUD7.98 billion, with Telstra specifically citing the impact of the NBN here. It said it had absorbed around AUD600 million of negative recurring EBITDA headwind in the period, while adding that, to date, the NBN had adversely impacted its EBITDA by an estimated AUD1.7 billion since FY 2016. Reported net profit after tax (NPAT) for the year tumbled by almost 40% to AUD2.15 billion.

Looking ahead, Telstra has warned that it expects its forthcoming financial year to be ‘the biggest in-year [National Broadband Network] headwind to date, with between AUD800 million to AUD1 billion expected from the recurring impact of the NBN’. As such, it has forecast that total income will be between AUD25.7 billion and AUD27.7 billion in FY 2020, while EBITDA is expected to be between AUD7.3 billion and AUD7.8 billion, with capital expenditures of between AUD2.9 billion and AUD3.3 billion.

In operational terms, Telstra reported a retail mobile subscriber base of 18.3 million at end-June 2019, up from 17.7 million a year earlier, of which 8.2 million were post-paid accesses. Post-paid mobile ARPU was reported as being AUD54.8 per month in FY 2019, down from AUD56.5 a year earlier, with post-paid churn standing at 11.8% (FY18: 10.9%). In the fixed line arena, Telstra reported 3.71 million ‘bundle and standalone data services in operation (SIOs)’ at mid-2019, representing a 3.0% annualised increase. Standalone voice SIOs continued on a downward trajectory, however, tumbling by 27.7% y-o-y, to 1.4 million.

Andrew Penn, Telstra’s chief executive, said of the company’s annual performance: ‘FY19 has been a pivotal year for Telstra. Notwithstanding the intense competitive environment and the challenging structural dynamics of our industry, it is a year in which I believe we can start to see the turning point in the fortunes of the company from the changes we have embraced.’

Australia, Telstra (incl. Belong)