Telstra beats flat forecast

By Phil Boeyen, ShareChat Business News Editor

Wednesday 6th March 2002

Australian telecoms giant Telstra Corp (NZSE: TLS) has described its first half result as solid with a 6% rise in underlying profit beating its own expectations for flat growth.

In the six months ended December Telstra made a net profit after tax of $2.01 billion, down 20% from the same period the year before. However CEO Ziggy Switkowski says the previous period included one-off benefits of a superannuation writeback and the sale of part of the company's interest in Computershare.

Dr Switkowski says underlying profit after tax and minorities grew 6% to $2.23 billion, with earnings before interest and tax after normalisation 2% higher at $3.58 billion.

"Telstra's mobile business success, continuing improvements in customer service, strong cashflows, capital management, ongoing cost control and positive moves in the international portfolio were highlights of an active six months.

"The half year result shows we are moving in the right direction and we are well positioned to leverage any upswing in the industry."

Telstra's boss says the company is set apart from its global telco peers by a strong balance sheet and AA- credit ratings and an increased interim dividend of 11 cents per share, up from 8 cents previously, demonstrates its confidence in the future.

"Telstra, like so many other companies, has experienced a demanding six months competing for the consumer dollar while steering around the structural changes occurring across the industry, but it has demonstrated an ability to improve services to customers and defend market shares at the same time as containing costs."

The company says the major growth driver in the interim reporting period came from its mobiles business, which posted double digit revenue growth.

"Mobiles services growth reflects the strength and robustness of our two networks and the fact that we
offer the best service and coverage for our customers both in metropolitan and regional Australia," Dr Switkowski says.

Markets in both Australia and New Zealand seemed happy with the unexpected growth and increased dividend, upgrading Telstra's stock immediately after the interim announcement.

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