Telstra posts $1 billion profit, but enterprise unit falls flat

Telco giant Telstra has lifted its dividend amid soaring profits and strong growth in its mobile business, but will conduct a full review of its lucrative enterprise unit which has fallen flat.

Telstra on Thursday posted a $1 billion net profit for the six months to December 31, up 11.5 per cent year-on-year, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were up 3.1 per cent to $4 billion.

The nation’s biggest telco has delivered a $1 billion profit, but says not all parts of the business are performing well.
The nation’s biggest telco has delivered a $1 billion profit, but says not all parts of the business are performing well.Credit: AAP

Total income edged up 1.2 per cent to $11.7 billion, and Telstra chief executive Vicki Brady lauded the telco’s mobile performance, which she said was driven by more customers, higher revenues per customer and cost discipline.

“We know the external environment is putting pressure on consumers and businesses, and we will continue to invest to deliver connectivity that is reliable, resilient and secure, and offer plans that are simple and deliver the services and choices our customers need,” Brady said.

The company’s network applications and services [NAS] business disappointed, however, seeing its sales fall across its calling applications and professional services.

Revenues at the division, which includes network security, cloud services, unified communications and industry services, were hit by competition and technology change, and Brady said the unit “is clearly a long way from where we need it to be”.

Telstra tightened its earnings forecasts as a result, trimming its targeted underlying EBITDA this financial year to between $8.2 billion and $8.3 billion.

“We are undertaking a full review of the products and services we provide within our enterprise business, and particularly our NAS portfolio, to make sure they both meet the current and future needs of our customers, and create shareholder value,” said Brady.

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Telstra will pay a fully franked dividend of 9 cents per share, up 5.9 per cent year-on-year, to be paid March 28.

Telstra shares last traded at $3.99, giving the company a market valuation of about $46.1 billion.

More to come.

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Source: Thanks smh.com