-- Telstra full year net profit up 5.4% at A$3.41 billion
-- Company sees single-digit revenue and EBITDA growth FY13
-- Telstra to pay final dividend 14c/share
(Adds analyst comments in third, fourth and 15th paragraphs, CEO
comments in fifth and sixth paragraphs, closing share price in
seventh paragraph, CFO comment in 11th paragraph)
By Gavin Lower and Ross Kelly
MELBOURNE--Telstra Corp. (TLS.AU), Australia's largest telecoms
company by market value, Thursday reported a 5.4% rise in annual
profit as spending on its mobile network paid off by boosting
cellphone customer numbers.
The addition of 1.6 million mobile customers in the year to June
30 brings the total number to 13.8 million and comes as Telstra
adapts to the mass migration of customers away from its traditional
fixed-line network.
Telstra's gains came largely at the expense of Australia's third
largest telco, Vodafone Hutchison, a joint venture between Vodafone
Group PLC (VOD) and a subsidiary of Hutchison Whampoa Ltd.
(0013.HK). The venture has experienced an exodus of hundreds of
thousands of customers over the past two years because of network
reliability problems.
Macquarie Group analysts said Telstra appeared to have increased
its market share in the mobile space to 46% in the second half of
fiscal 2012.
Chief Executive David Thodey told analysts during a conference
call that while mobile growth had slowed in the second half of
fiscal 2012, the company was preparing for the release of Apple
Inc.'s (AAPL) iPhone 5 which "will be a jab in the arm for the
industry."
Mr. Thodey also said that in terms of potential mergers and
acquisitions, "we scan the markets pretty aggressively...but
there's nothing on the horizon at this time."
Telstra reported net profit of A$3.41 billion compared to A$3.23
billion a year earlier and missed the A$3.48 billion average of
five analysts' forecasts compiled by Dow Jones Newswires. Telstra
shares closed down 2.3% at A$3.88, while the benchmark S&P/ASX
200 index ended down 0.1%.
"It could be that investors were expecting capital management or
something special," said Rhett Kessler, a portfolio manager in
Sydney with Pengana Capital, which holds Telstra stock.
"Investors are also shifting away from safe havens generally. At
a cursory look, this is a solid result which has delivered on
operational expectations," Mr. Kessler said.
Telstra has agreed to progressively shut down its fixed-line
infrastructure and transfer its customers to the
Australian-government owned NBN Co., which is rolling out the
country's new high speed internet network, in exchange for A$11
billion. A six-month delay and 4% increase in the cost of the new
network to A$37.4 billion announced by the government Wednesday
stoked fears of slower payments to Telstra because they are
staggered based on the rollout's progress.
Telstra Chief Financial Officer Andy Penn said in an interview
that "at first glance" the delay didn't appear to have a
significant impact on Telstra.
Investors are holding out for Telstra to eventually start
returning some of the A$11 billion broadband windfall in dividend
payouts or a share buyback. The company said Thursday it's "not
contemplating capital management initiatives at this time", flagged
an additional A$500 million of spending on its mobile network and
pledged to keep its dividend steady at 28 cents per share for the
current financial year.
Investments including A$3.6 billion spent last year on upgrades
including an expansion of its 4G mobile network are bearing fruit,
Mr. Thodey said in a statement.
"We have achieved top and bottom line growth and expect to do so
again in the 2013 financial year," Mr. Thodey said.
Analysts at telecoms researcher Ovum said Telstra's rivals will
find it difficult to challenge the company's superior mobile
network, and will have to pursue strategies as "alternative"
providers to Telstra.
Telstra forecast low single-digit growth in revenue and earnings
before interest, tax, depreciation and amortization for the current
financial year. Revenue last year edged up 1% to A$25.37 billion,
while EBITDA increased by 0.8% to A$10.23 billion. Both metrics
were at the lower end of the company's guidance of low single-digit
growth.
Telstra's mobile business, which includes cellphones and mobile
broadband internet, now account for about a third of company
revenue. Telstra said the decline in fixed-line revenue was
"steady" at 6.1%.
One negative for the company was its Sensis directories
business, which is adjusting from print advertising to offering
internet advertising, where revenue fell 16% to A$1.51 billion.
-Shani Raja in Sydney contributed to this article
-Write to Gavin Lower at gavin.lower@wsj.com and Ross Kelly at
ross.kelly@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires