Game of two halves for Telstra

By Phil Boeyen, ShareChat Business News Editor

Wednesday 29th August 2001

Telstra (NZSE: TLS) says its full-year profit of A$4.06 billion reflects two different operating environments over the past year, with a strong first half followed by a flat second half as the industry slowed.

The company's consolidated net profit after tax and minorities for the year ended June was 10.4% higher than the previous year and earnings per share grew by the same amount, to 31.5 cents.

CEO Dr Ziggy Switkowski says that normalised profit represents an underlying growth of 5.5% in earnings before interest and tax to A$6.4 billion, mainly driven by its wholesale, mobiles, data and internet businesses.

"The result saw Telstra continue to improve its customer service, pricing options, product range and cost structure and hold margins despite intense competition and an industry slowdown.

"Telstra is a growing company, investing in the future, rigorous in managing costs, yet focused on improving customer service levels in a very competitive industry. Our current performance, financial strength and the range of offerings for our customers position us well for future success."

Dr Switkowski says the company grew its core business domestically despite the absorption of the GST into its local call cost, and has stabilised its market shares.

"Our underlying sales revenue was A$18.9 billion, representing growth of 3.2% for the full year. This top line result was impacted by slowing growth in the mobile sector, market share losses in the fixed line business and intense price-based competition in general.

"As the rate of growth slowed in the industry Telstra took decisive action on costs and is well poised to take advantage of any upswing."

Reminiscent of Telecom's recent result, Dr Switkowski has also point out that cost reductions have improved the final figures.

The company says its offshore strategy in Asia and the performance of its Asian investments are tracking to plan except for a write down of the Regional Wireless Company value by A$1 billion, although it says that has been partially offset by the A$852 million profit on the sale of its Global Wholesale assets to Reach.

A final dividend of A11 cents per share has been declared, bringing the full-year payout to 19 cents per share.

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