Telstra’s profit has surged in the 2016 full-year, up 36.6 per cent year-on-year, with the telco set to invest up to an extra $3 billion in its networks over the next three years and confirming a $1.5 billion share buyback.
Telstra’s profit for the full-year totalled $5.78 billion, including $1.8 billion from the sale of Autohome shares, while revenue rose 1.5 per cent year-on-year to $25.9 billion.
While Telstra has suffered a series of network outages this year, it has confirmed that over the next three years it will invest up to an extra $3 billion “in a major wave of customer-focused investments in its networks of the future and digitisation”.
“Our customers and our networks are our biggest assets,” Telstra CEO Andrew Penn commented. “We must invest to set new standards and deliver excellent experiences for our customers.”
On release of the results, Penn acknowledged the importance of improving customer experience.
“Work still needs to be done to improve our systems and processes that can cause customer frustration and delay, and to ensure that we consistently deliver a great service experience,” he commented.
“We know that customers expect more from us as their reliance on smart devices continues to grow. This is why improving the customer experience is paramount, and why network interruptions in the second half were particularly disappointing.”
While the outages have been an ongoing problem for Telstra this year, it grew its customer base over the course of the year.
Telstra added 560,000 domestic retail mobile customer services during the year, totalling 17.2 million, and 235,000 domestic retail fixed broadband customers, rising to 3.4 million. Telstra’s NBN connections grew by 289,000 to 500,000.
“During the year we upgraded 2,375 network sites to 4GX and achieved 98 per cent population coverage with 4G,” Penn commented. “We are on track to reach 99 per cent coverage by June 2017. Overall, we invested $4.0 billion in capital expenditure, including our fixed and mobile networks and other works.
“Following network disruptions in the second half of FY16, we continue to implement recommendations from our core network and IT system review, addressing sources of potential risk and building network durability and capability.
“This includes $250 million from our existing capital program over the next six to 12 months to provide a higher degree of network resilience and improved network performance in the mobile and ADSL broadband networks.”
The buyback, meanwhile, will comprise a $1.25 billion off-market share buyback and a $250 million on-market share buyback, expected to be funded from Telstra’s surplus cash and accumulated profits, including from the Autohome shares sale.
“Telstra’s current level of capital is more than what we need in the short-to-medium term, so the return of surplus capital to shareholders is considered appropriate at this time,” Penn commented.
In the 2017 financial year, Telstra stated that it expects to deliver mid-to-high single digit income growth and low-to-mid single digit EBITDA growth.
