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Telstra Spending Big On Outage Solution, Penn Tells Investors

After recording total income of $27 billion in FY2016, Telstra is this week looking to mid-to-high single-digit growth in FY207, CEO Andy Penn is telling retail investors at a series of meetings round Australia.

The meetings began in Melbourne yesterday and will be followed by similar events in Sydney today and Brisbane tomorrow.  Adelaide, Perth and Canberra will experience webcasts of the meetings.

Penn yesterday told Melbourne investors – many of whom have been disturbed by the number of outages in recent months – that up to $3 billion in additional capital expenditure will be made over the next three years, much of it to deliver improved networks and hopefully a better customer experience.

His guidance for FY2017 shows an expected increase to total income in the mid-to-high single digits from 2016’s $27 billion. Capex-to-sales ratio (15.2pc in 2016) is expected to be down 18pc, while free cashflow is tipped to be down from $4.8 billion to $3.5-4 billion.

On the subject of outages, Penn is telling investors that the Big T has undertaken “extensive” end-to-end reviews of its core networks, and plans to spend $250 million in a bid to improve matters. That will include $50 million to improve recovery times and monitoring on mobile networks; $100 million to improve resilience and reliability; and $100 million to increase ADSL capacity.

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