Telstra shares plunge on results announcement

Stuart Corner
Saturday, 10 September 2005 15:26

IT Industry - Deals

The market value of Telstra fell $1.7 billion yesterday in the wake of its annual results announcement, despite a record profit. The fall came after new CEO, Sol Trujillo, revealed what he said was a raft of problems inside the Telco, and after CFO, John Stanhope, said the impact of intensifying competition and accelerating declines in PSTN voice revenues was clear in a slower second half, and that this trend was expected to continue into the future.

Telstra reported net profit increasing $329 million, eight percent, to $4.447 billion. Underlying sales revenue increased by 3.7 percent or $770 million, to $21.5 billion, due mainly to growth in broadband, mobiles, advertising and directories, pay TV bundling, and offshore services revenue. This was offset by a decline in PSTN calling products as migration to other products occurred.

Total PSTN products revenue declined by 3.4 percent or $275 million for the year with a decline of 1.9 percent in the first half and 5.1 percent in the second. Basic access lines declined over the year by 1.6 percent to 10.12 million. An increase in basic access revenue was offset by volume and yield declines across local calls, international direct and national long distance products.

Mobile services revenue, including wholesale mobiles, grew by 8.4 percent or $290 million. Telstra added 168,000 mobile SIOs in the fourth quarter for a total of 8.227 million, an increase of 623,000 or 8.2 percent for the year. SMS volumes grew 18 percent to 2.3 billion messages for the year. Total internet and IP services revenue grew by $364 million or 35.9 percent to $1.4 billion. Total broadband revenue grew $307 million driven by subscriber growth of 116.4 percent from 806,000 to 1.744 million.