Telstra profit meets expectations

The result was in line with analyst expectations of a $4.2bn profit but shares lost 2.24 per cent to $6.10 on the news. Net profit grew 20 percent year-on-year to AUD 196 million.

Andy Penn’s aggressive stance on Telstra’s mobile strategy has anxious some shareholders.

“Our network is one of the biggest influences on preference and advocacy with our customers, that’s why we’ve been investing billions of dollars for many years and why we will continue to do so”, he observed. Optus mobile service revenue increased by 5 percent to AUD 1.21 billion. Free cashflow is expected to be between $4.6 billion and $5.1 billion and capital expenditure to be around 15 per cent of sales to fund increased mobile network investment.

“We’re a bit scared about it and it’s interesting he spoke so openly about it”, Mr Maas said. They are also filling in gaps in the company’s services.

However, investors were not impressed with the results, with Telstra shares down almost 2 per cent at $6.12 by 12:18pm (AEST).

Mr Penn used the results to lay out his priorities for the company, including increased investment in its mobile network and the search for new acquisitions to help drive the telco’s profit growth.

Earnings per share (EPS) increased 0.3 cents to 34.5 cents.

Mr Penn said Telstra’s strategic growth plan was designed to transition Telstra into a global technology company that empowered people to connect, and Telstra continued to invest in new businesses to grow its coverage and capability outside of Australia.

“It sends a pretty clear signal to [Mr Penn’s] competitors that a price war isn’t in anyone’s interests”, he said.

Credit Suisse analyst Fraser McLeish also backed Telstra’s mobile strategy.

“I think Telstra is going to be fairly cash-hungry over the next few years”, he said.

Telstra said it will pay shareholders a final dividend of 15.5 cents per share next month after it posted net profit after tax of $4.3bn for the 2015 financial year.

“This is our first full financial year operating without the CSL Hong Kong mobile business, which was sold in May 2014”.

On this basis, which Telstra believes best demonstrates the performance of its underlying business, total income was up 2.3% to $26.3bn.