Australia’s largest mobile operator Telstra reported a sharp decline in its net profit for the fiscal year ending 30 June due to higher than expected charges related to the country’s National Broadband Network (NBN) rollout.
The operator’s net profit for fiscal 2017 dropped 32.7 per cent year-on-year to AUD3.89 billion ($3.07 billion), with revenue falling 2.7 per cent to AUD26 billion.
Telstra CEO Andrew Penn (pictured) said digital disruption is continuing to accelerate, stating: “we are entering a significant point in the transformation of the telecommunications market with the NBN rollout reaching scale”.
In May 2016, the operator predicted the negative impact of the NBN rollout on EBITDA in fiscal 2017 would be in the range of AUD2 billion to AUD3 billion.
“Given the latest outlook of NBN CVC [connectivity virtual circuit] charges, which we estimate will more than double over the coming years, we now expect the impact is likely to be at the top end of this range, around AUD3 billion,” Penn said.
Wireless performance
In fiscal 2017, mobile revenue declined 3.2 per cent to AUD10.1 billion, while fixed turnover was down 4.7 per cent to AUD6.4 billion.
Post paid sales during the year were flat at AUD5.45 billion. While post paid ARPU fell 2.5 per cent to AUD67.70, the company said there was continued growth in minimum monthly commitments offset by the impact of factors such as unlimited calls, larger data allowances, lower cost of excess data, and a higher mix of bring-your-own-device plans.
Its mobile customer base increased by 218,000 year-on-year, bringing the total to 17.5 million at end-June. It added 169,000 post paid users, concluding the period with 7.6 million contract subscribers.
Prepaid revenue grew 5.6 per cent to AUD1.01 billion due to an increase in ARPU, but the gain was partly offset by a loss of 116,000 unique users. ARPU grew 9.3 per cent to AUD22.29 as a result of stronger activations and longer customer tenures.
Mobile broadband sales fell 13.7 per cent to AUD992 million despite the addition of 48,000 prepaid customers.
The operator spent 14 per cent more on capex in fiscal 2017 (AUD4.6 billion), adding or upgrading 2,200 mobile sites to 4GX and extending 4G coverage to 99 per cent of the population.
For FY18 the company expects income to be in the range of AUD28.3 billion to AUD30.2 billion, with capex of between AUD4.4 billion and AUD4.8 billion, or approximately 18 per cent of revenue.
