Telstra registers profit drop in first half

Telco reports net profit after tax of $1.8 billion for the six months ending 31 December

Telstra CEO Andrew Penn

Telstra CEO Andrew Penn

Telstra’s net profit after tax in the first half of FY17 dropped 11.8 per cent to $1.8 billion, compared to 1H16, the telco reported today. The telco’s total income in the half declined 0.7 per cent to $136.7 billion. Reported EBITDA decreased 1.6 per cent to $5.2 billion.

Adjusted for the impact of the Australian Competition and Consumer Commission decisions on mobile terminating fees and regulated wholesale pricing of fixed line services, total income and EBITDA grew 2.2 per cent and 2.4 per cent, respectively, Telstra CEO Andy Penn told a briefing on the results.

During the half the telco added 200,000 net new retail mobile services, bringing Telstra’s mobile customer base to 17.4 million. The telco also boosted fixed broadband customers by 90,000.

Telstra’s NBN fixed-line market share grew to 51 per cent, with the telco adding 292,000 services during the six months ending 31 December.

“There is no doubt the competitive intensity in the market has increased,” Penn said.

“During the half we saw data volumes continue to increase and competition in pricing across fixed, bundles, mobile and data and IP. There has also been an acceleration in the rollout of the NBN which we have previously reported will negatively impact our EBITDA by $2 to $3 billion [a year] over the longer term.”

Outage impact

Penn said that Telstra’s strategic net promoter score (NPS) was down by eight points in the half compared to the same period in the prior year. The CEO attributed the drop to the impact of a series of network outages, particularly on the telco’s larger business customers.

“We are confident that the sentiment of our corporate customers is recovering and that should reflect in our NPS results in the coming half year,” Penn said.

“Encouragingly we have seen positive trends in both strategic NPS and episode NPS for our consumer customers during the last six months underpinned by a number of customer focussed initiatives.”

Penn said that there were still “too many instances” where Telstra had let its customers down.

The telco has been investing in providing a better customer experience, Penn said, including delivering better network performance and new customer service initiatives.

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