Telstra Grow Base, Lose Profits In Underwhelming Earnings Report

Telstra has failed to meet analyst’s expectations in its latest earnings report, with profits slipping 14.4% to $1.79 billion.

Revenue also fell 6.4% to $12.8 billion.

Telstra’s share price dipped 5% in the immediate aftermath of the report’s release.

The company attributed the downturn to decisions by the ACCC that curbed the amount telcos can charge for calls and texts to a rival networks.

Discounting the impact of those decisions, Chief Executive Officer Andrew Penn argued the results showed Telstra had performed well in a highly competitive market, gaining customer numbers and increasing market share in NBN.

He insists “It is significant that we were able to increase subscriber numbers in mobiles and retail fixed plans despite the increased competition.”

Telstra now boasts an additional 200,000 domestic mobile users, 90,000 fixed broadband users, 124,000 bundle-buyers and 292,000 nbn connections (bringing the total to 792,000).

The telco says that in the 12 months to December 2016, user traffic over the mobile network increased 39%, traffic on the fixed network including nbn grew 51% and traffic on the Telstra Air Network increased “almost tenfold” by 322,000 devices-worth.

Telstra’s market share (excluding satellite services) now sits at approximately 51%.

Despite this growth, mobile revenue declined 8.7% to $5 billion while overall revenue from the company’s fixed-line business slipped 4.7% to $3.3 billion.

Mr Penn also provided an update on the ACCC’s inquiry into domestic roaming, saying he expects a decision from the regulator by the second half of the year.

“Telstra has invested heavily in regional Australia and will continue to do so if the regulatory settings remain in place. We are obviously concerned regarding the impact that declaration would have on operators’ incentives to invest and the negative impact that this would have on customers in Australia, particularly in regional Australia,” Mr Penn said.

“We made two submissions to the ACCC on the issue and we are encouraged by the huge response from across regional Australia showing that improving mobile coverage is the top priority. More than 100 community groups, councils, businesses and farming organisations had their say, and it was clear that most do not support regulated mobile roaming as the solution,” he said.