Australia's Telstra annual profit rises 10 p.c

WELLINGTON, AUSTRALIA: Telstra Corp Ltd, Australia's biggest phone company, reported a 10.3 percent rise in full year net profit on Thursday, driven by strong sales in high-speed Internet and mobile phone services.

Net profit for the year to June 30 rose to A$4.073 billion ($3.4 billion) from A$3.69 billion a year earlier.

Analysts on average had expected a net profit of A$3.81 billion, according to a Reuters Estimates survey of 12 brokers.

However, the revenue growth of the company slowed to 2.7 per cent. Compared to the previous year sales of A$24.8 billion, in the reporting year it had a sales of  A$25.51 billion.

Also the company downgraded certain aspects of its guidance and new chief executive David Thodey warned the company faces headwinds in the current year, including slowing economic growth.

“Our business is not immune to the economic slowdown,” Thodey said. “We continue to experience reduced usage of both fixed-line and mobile voice usage, while there is evidence of slowing customer growth in fixed broadband take-up.”

Telstra paid a final dividend of 14 cents per share compared with 14 cents last year.

Telstra shares closed on Wednesday at A$3.61. The stock has fallen 5.7 percent so far this year, compared with the broader market's 16 per cent gain.

“It is now clear benefits of Telstra’s 5 year transformation program will be slower to flow through to bottom line than originally envisioned,” said Nathan Burley, Ovum Analyst based in Melbourne. “The realty of transformation has hit and Telstra’s transformation will remain a tough on-going challenge.”

(With inputs from CIOL)