Telstra profit battered by rising costs

Australian incumbent Telstra saw profits fall 36% in the six months to end December, on higher customer service costs and fixed line churn.
 
Profit of A$1.2 billion (€884 million) during the period – the firm’s fiscal 1H11 – was down A$679 million on 2009, as operating expenses soared nearly 11% to A$7.8 billion due to the firm’s continuing focus on improving customer service.
 
The customer focus is deemed necessary to address declines in its fixed line business, which saw 109,000 lines lost during the period – equivalent to 3.3% of its fixed customer base.
 
Those losses contributed to an 8.4% decline in PSTN revenue, with local calls down 14% and national long distance minutes falling 9.3%.
 
However, fixed broadband customers grew 139,000, and the firm reduced its churn rate to 16.4% from 25.1% in F1H10.
 
Mobile service revenue grew 6.5% to A$3.4 billion, with the company adding 919,000 customers to bring its total to 11.5 million. However, postpaid ARPU fell 22.9% year-on-year to A$41.53, and overall mobile ebitda margins fell five percentage points to 29%.
 
Despite the mixed results, the firm maintained revenues at A$12.2 billion – down less than 1% year-on-year.
 
The company has maintained its outlook of a high single digit decline in ebitda and “flattish” revenue for the full fiscal year.

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