Telstra adds ~ 1 million mobile customers, at a price

Stuart Corner
Thursday, 10 February 2011 09:30

IT Industry - Deals

Telstra has reported mobile customer adds of close to one million and fixed broadband customer adds of 140,000 but the cost of getting them has contributed to a net profit plunge 36.0 percent.

CEO David Thodey said the growth represented a record. "We went back ten years and could not find a bigger half year growth."

Sales revenue declined 0.5 percent, to $12.3b, EBITDA fell 13.9 percent to $4.6b and NPAT fell 36.0 percent to $1.2b. Telstra said the results were in line with guidance.

On the plus side, Telstra added 919,000 mobile customers, including 297,000 postpaid phone customers and 505,000 wireless broadband customers. It gained 139,000 fixed broadband customers, after losing 30,000 in the first half of 2010. A total of 214,000 people signed up for T-Box or T-Hub and 420,000 customers took bundled multiproduct plans.

Telstra said: "Lower churn has been an important driver of the improvement [in fixed broadband] with the annualised fixed broadband disconnect rate falling from 25.1 percent to 16.4 percent over the prior corresponding period.

"Despite intense price competition, fixed broadband ARPUs continue to hold up well and were $56.36 in the half, down 1.7 percent. Fixed retail broadband revenue (including hardware) grew by 0.4 percent to $794 million."

The new mobile customers helped drive mobile revenue up by 11 percent and mobile broadband revenue up by 28 percent, compared to H1 FY10. However mobile broadband ARPU fell significantly was more customers took up prepaid services.

Telstra said: "Mobile broadband customers (postpaid and prepaid) at the end of December were 2.2 million, up 505,000 in the half and 254,000 in the second quarter with ARPU of $41.53 declining 22.9 percent year-on-year. The major driver of the ARPU decline has been the growth of prepaid mobile broadband, with customers more than doubling in the last year. Monthly prepaid unique users averaged 1.9 million in the December quarter, an increase of 54 thousand on the June quarter and generated revenue of $351m, up 9.0 percent on the prior corresponding period."

Directly variable costs (VDCs) or goods and services purchased increased by 20.4 percent to $3,148m. Telstra said: "The increase in DVCs was concentrated in our mobile business where mobile hardware cost of goods sold increased by 44.3 percent or $189m to $616m. Partially offsetting this cost was a $153m increase in mobile hardware revenues to $566m. Mobile subsidies increased by $140m or 44 percent to $457m with around a third of the increase incurred at [Hong Kong mobile subsidiary] CSL New World."