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Telstra Profit Dives 40% Amid NBN Battle

Telstra has reported a 40% year-on-year slump in full-year net profit, as it continues to grapple with heavy National Broadband Network costs and intense mobile competition.

The news brings its total dividend paid in FY19 to 16 cents/share, down from 22 cents/shares last year, and 31 cents/share the year prior.

For the full year ending June 30, net profit dived to $2.149 billion, with EBITDA slipping 21.7% YoY to $8 billion.

The telco attributes rising NBN costs for the hit to earnings, which it claims cost it around $600 million.

Total income notched the higher end of its previous forecast, dipping 3.6% to $27.8 billion.

Telstra claims the NBN has cut around $1.7 billion from EBITDA since 2016, adding it’s around “50 per cent of the way through the recurring financial impact of the NBN”.

[Telstra CEO, Andy Penn]

Admitting FY19 was “challenging”, the telco asserts underlying trends, “excluding the recurring in-year headwind of the nbn”, are forecast to improve over FY20.

“Returning our business to growth will take time,” affirms Chief Executive, Andy Penn.

“However, I have great confidence that our strategy can arrest the decline in our earnings and create opportunities for growth.”

“Telstra also expects financial year 2020 to be the biggest NBN headwind to date, with between $800 million to $1 billion expected from the recurring impact of NBN.”

The news follows a significant overhaul of Telstra’s internal processes, reducing its mobile and data plans from 1,800 to just 20.

During the year, the company attracted 378,000 new customers, whilst its fixed cost base dipped 6% ($456 million).

The telco claims it has slashed around $1.2 billion in costs as part of its Telstra 2022 strategic overhaul, however, some way remains before it hits the $2.5 billion target.

Telstra has continued to progress its job cutting effort, with over 8,000 staff to be made redundant by 2020.

“Around 75 per cent of the net 8,000 direct workforce role reductions we announced as part of our T22 strategy have been identified,” the company claims.

“We have also made progress creating 1,500 new roles in areas like cybersecurity and software engineering.”

For the full-year, mobile revenue lift 1.6% to $10.5 billion, whilst fixed line revenue slipped 9.4% to $5.2 billion.

The news comes as Telstra continues to ramp up its 5G network roll-out, taking on the likes of Optus.

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