Telstra boosts revenue in all areas, except wholesale

Stuart Corner
Thursday, 13 August 2009 06:54

IT Industry - Strategy

Telstra has reported a strong result for the full year, broadly in line with guidance and analyst expectations in which all business units posted revenue increases, except wholesale.

This would appear to confirm comments made earlier this year by CFO, John Stanhope that wholesale is a declining business.

Telstra's total revenue was up 2.7 percent to $25.5 billion. This was made up of a 3.1 increase in Telstra Consumer revenues, 4.7 percent from Telstra Business, 2.9 percent from Enterprise & Government, 3.4 percent from Telstra Retail, 5.8 percent from Sensis and 13.8 percent from International, offset by a 5.2 percent decline in wholesale revenues.

Telstra said: "Segment income for Telstra Wholesale declined by 5.2 percent to $2,383 million as the business continued to be impacted by ULL migration in fiscal 2009. PSTN revenue declined due to continued losses to ULL combined with the overall market reduction in the use of PSTN services. The increases in ULL together with higher spectrum sharing services also resulted in a decline in wholesale internet revenue and growth in intercarrier access revenue as competitors continue building their own networks.'"

Partially as a result of the uptake of ULL services PSTN revenue earned by Telstra wholesale was down 19.9 percent. However, Telstra said that ULL uptake had slowed in fiscal 2009 despite the low rental prices in metro Australia (following ACCC intervention).

Telstra said that Wholesale EBIT contribution had decreased by 7.2 percent to $2,214 million in fiscal 2009, which Telstra said reflected the change to a lower mobile terminating access (MTA) rate in the prior year. Total wholesale expenses grew by 32.3 percent driven by the impact of the mobile termination access rate adjustment in the prior year which, Telstra said, had resulted in an increase of $54 million in carrier network outpayments.

Telstra claimed that the determination from the ACCC in 2008 lead to a difference between the agreed rate (12 cents per minute) and the actual rate (9 cents per minute) which had distorted the wholesale segment results in fiscal 2008.

Telstra's wholesale broadband revenue also declined, by 10.1 percent to $498m. Retail broadband service revenue was up 15.9 percent to $1.533b. Telstra said the wholesale revenue decline was largely a result of migration to ULL services.

ULL services in operation rose 32.4 percent during the year to 698,000. One area of wholesale that did grow revenue was wholesale Internet and data, up 10.8 percent, driven by higher demand for capacity and backhaul.