Australia's Telstra Net Profit Rises 2.9%, Missing Forecasts

Telstra, Australia's largest phone company, said its 2007 net profit rose 2.9%, below analysts' forecasts, although mobiles and broadband revenues were strong, and offered a "prudent" outlook for 2008.

For the fiscal year ending June 30, Telstra posted a net profit of A$3.28 billion (US$2.83 billion), up from A$3.18 billion in 2006, as revenues increased 4.2%.

That fell short of analysts' forecasts of a 5.7% rise to A$3.36 billion, according to a Reuters Estimates survey of 13 analysts. Estimates were for a 3.6% increase in revenues. Telstra said for 2008, it "prudently" expects revenue growth of 2% -3% and earnings before interest and tax growth of 3% -5%.

That was well below some analysts' expectations, with UBS looking for a company estimate of 12% -14% EBIT growth, and at the low end of consensus estimates of a 5.1% rise.

Telstra slowed the decline in fixed-line revenues over the past year to 4.1%, while mobile revenue was boosted by a big increase in mobile data and broadband subscriber growth was strong.

Mobiles revenue rose 13.9% and retail broadband was up 66.2%, Telstra said.

Telstra has said 2007 will be the heaviest year for costs associated with its five-year overhaul, begun in November 2005, to reduce dependence on fixed-line revenues, and said on Thursday its overhaul was "on time and on track".

Telstra has said fixed-line revenue, which currently makes up 30% of sales, will decline to about 20% by 2010 as the new drivers of the business expand.

Restructuring costs were booked mainly in the first half, with first-half pretax profit down 20%, but the second half forecast to be up 37% to 40% from the 2006 second half.

The company's shares have added 14.3 % this year, outpacing a 7.6% gain in the broader market.

Telstra, once a government-owned monopoly, last week renewed its legal and anti-regulation campaign, mounting a court challenge to the Australian government's decision to award main rival Optus A$958 million in funding for broadband in remote areas. Optus is owned by Singapore Telecom.

Contact U.S. News


    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video