Telstra Profit Down 14%, COVID Cost To Double FY21
Telstra has reported a 14.4% slump in full year profit to $1.84 billion, with EBITDA hit $200 million from the coronavirus pandemic. The telco expects a $400 million COVID19-related hit in financial year 2021.
Total income dipped 5.9% to $26.16 billion, which is in line with its previous guidance.
The telco maintained its final dividend of 8 cents per share, bringing the total dividend to 16 cents per share.
Mobile revenue declined $461 million in FY20, with reported postpaid handheld ARPU down 8.2%.
NBN wholesale pricing continues to be the “largest negative impact” on Telstra’s fixed business, with the telco pushing for long-term change in RSP economics.
The telco also opt to press pause on some role reductions as part of its T22 strategy until February 2021.
Telstra states nearly three quarters of the measures used to monitor its T22 strategy are either completed or on track for delivery.
Chief Executive, Andy Penn, states it reflects a lot of about the “strength of our business and strategy” that the telco could meet its former guidance, maintain dividend and offer future guidance during the coronavirus pandemic.
For the 2021 fiscal year, the telco has forecast total income of $23.2 billion – $25.1 billion, with EBITDA of $6.5 billion – $7 billion.
Telstra’s earning guidance predicts an estimated $400 million negative hit from the impact of the coronavirus pandemic.
“We have invested, and will continue to invest, for long-term returns and opportunities, especially in mobile and our T22 strategy, the benefits of which will be realised over time. Our long-term ambition is to grow ROIC [return on invested capital],” states Mr Penn.
The telco has amended its T22 target, now targeting a return on invested capital to exceed 7% by 2023.
“Several things have changed since we set our ROIC ambition as part of the launch of our T22 strategy. We have experienced deeper competition across products and slower return to growth, especially in mobile,” adds Penn.
“In addition, AASB16 was implemented resulting in a 1 percentage point reduction in ROIC, which previously caused us to push out our target by a year. In this same period our WACC has also reduced by approximately 1.5 percentage points.”
Shares in Telstra closed at $3.29 on Wednesday.