TelstraClear lifts earnings by 18 percent ahead of sale of Vodafone

Thursday 9th August 2012

TelstraClear, the New Zealand phone company that Telstra has agreed to sell to Vodafone, lifted full-year earnings by 18 percent before an impairment charge on the business.

Earnings before interest, tax, depreciation and amortisation climbed to A$99 million in the 12 months ended June 30, from $84 million a year earlier, according to Telstra's annual results, released to the ASX today. Sales fell 2.3 percent to A$502 million.

Vodafone last month agreed to buy TelstraClear, for $840 million, giving the British company a stronger base from which to challenge New Zealand's Telecom. Telstra has taken a A$130 million impairment charge against goodwill for TelstraClear prior to the sale, it confirmed today.

Sydney-based Telstra today posted a 5.4 percent gain in net profit to A$3.4 billion as sales edged up 1 percent to A$25.2 billion. It was the second consecutive year of revenue growth after sales tumbled 2.3 percent in 2010.

Chief executive David Thodey forecast growth in sales and earnings would continue in 2013 at a "low single digit" pace, with the dividend expected to be unchanged from 2012 at 28 cents a share.

Shares of Telstra last traded at A$3.97 on the ASX and have gained 22 percent this year. The stock is rated a 'hold' based on a Reuters poll of 18 analysts, with a price target of A$3.63.

Telstra's results showed a continuation of the trend of growing mobile sales and shrinking revenue from fixed-line services. Fixed revenue fell 6.1 percent to A$7.49 billion and mobile gained 8.5 percent to A$8.67 billion.

Telstra's fixed-line copper wires are being handed over to state-owned NBN Co as part of plans to roll out a national broadband network in Australia, in return for some A$11 billion.

Telstra's sale of TelstraClear is subject to regulatory approvals.

(BusinessDesk)

BusinessDesk.co.nz

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