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Telecommunications Telstra surges ahead with profit and revenue increase and bullish forecasts.
Telecommunications Telstra surges ahead with profit and revenue increase and bullish forecasts. | Telstra surges ahead with profit and revenue increase and bullish forecasts. |
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| by Stuart Corner | |
| Wednesday, 13 August 2008 | |
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Telstra said: "We are raising our five year compound annual growth rate (CAGR) objectives for total revenue to three percent to four percent and EBITDA to 3.0 percent to 3.5 percent. We are also increasing our 2010 capex/sales ratio to around 14 percent. We are retaining our EBITDA margin target of 46 percent to 48 percent and reaffirm our free cash flow target of $6 billion to $7 billion in FY10. " This outlook does not include any NBN considerations." The company claimed that, three years through its five year end-to-end transformation "we continue to hit or exceed the challenging targets we set ourselves back in November 2005. Subject to any significant regulatory outcomes, we remain on track to achieve our core long-term management objective of $6,000 to $7,000 million of free cash flow in fiscal 2010." Telstra produced stellar growth in retail broadband - revenue up 49.2 percent and subscribers up 35.9 percent to 3.33 million generating ARPU of $53.02 - and in mobile data. "Mobile data growth of 44.1 percent has been the major driver with 588k wireless broadband subscribers at June 2008 as additions remain at the rate of approximately 20k per month." Telstra said. It defines these as those using laptop cards and data packs equal to and in excess of $29 which equates to data usage of 80Mb and above. It attributed the 16.7 percent reduction in capex to "the transformation program [moving] beyond the peak spend period." However Telstra noted that "IT spend is the largest component of the program and will remain so as the IT transformation continues." There have been unconfirmed reports of major delays and cost blowouts in the transformation programme. Telstra, however, claims that " Our complex, five year transformation continues to be on track." However it does admit to having missed targets, saying: "We have now migrated 3.3 million customers and 4.3 million services. Although we did not achieve our ambitious target of five million customer migrations before the end of June, we remain 100 percent confident in the robustness of the systems and will commence the migration of business customers later this month. The delay in migrations has had no material impact on our financial performance. "The code is deployed and running at scale, and this has all been achieved without breaking our central commitment that there should be no interruption to either our customers or the wider business. We have seen no increase in complaint volumes and all billing accuracy and revenue assurance metrics are equal between the new and legacy systems." Telstra claims that "This is one of the world’s largest and most complex IT transformations and will allow Telstra to provide all of its customers from private consumers to large corporates an unparalleled customer experience, the Telstra experience." This article wil be updated later in the day with more details.
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