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Telstra Warns Lower Profit & “Challenging Conditions”

Shares in Telstra have dived 3.4% after it warned full-year EBITDA will likely be in the “bottom end” of previous forecasts, with “challenging trading conditions” expected to remain.

Back in February, the telco forecast an EBITDA of $10.1 billion – $10.6 billion.

The news comes as Telstra continues to increase subscriber numbers and mobile usage. Despite this, the telco claims its been victim to “competitive dynamics” which have lead to increasing pressure on margins – from fixed, mobile and NBN divisions.

Despite the announcement, Telstra re-affirms its commitment to a 22 cent total dividend payment.

Revenue is expected to be in the middle of its $27.6 billion – $29.5 billion forecast.

Cashflow is expected to notch the top end of its previous $4.2 billion – $4.7 billion guidance.

Telstra Chief Executive, Andrew Penn, is scheduled to make a major speech at the JP Morgan TMT Equity Conference in Boston tomorrow.

Penn will reportedly touch on the negative effect the government’s NBN has had on its earnings.

Telstra has continued to decrease “core fixed costs”, with a 7% decline expected, and $300 million in restructuring costs.

 

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