[LINK] Telstra results ....

Frank O'Connor foconnor at ozemail.com.au
Thu Aug 10 15:41:32 AEST 2006


Note to self ...

I am not going to say, "I told you so!"

Good to see that the Grand Plan has been produced as well.

					Regards,
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Telstra reports $1bn slide in profits
Staff reporters
August 10, 2006 - 12:08PM

Telstra's second-half profit has dropped by about a half on a year 
earlier, sinking to $1.04 billion, after Austalia's largest telco 
reported a drop in its lucrative fixed-line business.

Revenue from its fixed-line operations shrank 6.7 per cent to $7.478 
billion for the year. That helped drag down Telstra's full-year net 
profit by more than a quarter to $3.181 billion, its worst annual 
result since 1998.

For the full year, Telstra's profit dropped 26 per cent to $3.181 
billion, from $4.31 billion in the previous year.

The results also fell short of expectations with analysts' forecasts 
predicting  net profit of about $3.4 billion for 2005/06.

Its shares were down three cents in recent trade to $3.77 in recent 
trade.  The S&P/ASX 200 was down .5 per cent to 4939 points.

Overall sales revenue for the year rose by 2.7 per cent to $22.75 
billion in 2005/06.

Turnover from the less profitable mobile sector  rose by 6.1 per cent 
to $4.972 billion while broadband revenues grew 64.5 per cent to 
$1.191 billion.

ABN Ambro telecommunications analyst Ian Martin said investors would 
not be pleased with the result.

''I think they'll be very unhappy with the lack of guidance on the 07 
dividend and a caution that the company's put out over earnings 
margins being subject to regulatory outcomes,'' Mr Martin said.

''I think that's going to weigh heavily on the stock,'' he said.

''The board hasn't committed to that 07 dividend, which is going to 
make it difficult to think about T3 next week.''

Advertising and directories revenue rose 7.9 per cent to $1.711 
billion, the company said.

Telstra maintained its final dividend at 14 cents per share, fully franked.
Total dividends for the year stood at 34 cents, down from 40 cents in 
the prior year which had featured an extra special dividend with the 
final payout.

The company said it planned to increase capital spending by more than 
$1 billion dollars over the next year.

The announcement comes days after Telstra announced it had canned 
plans for a Fibre-to-the-node broadband network, which would have 
cost the telco $4 billion. Telstra shares closed yesterday at $3.80.

Its earnings before interest and tax (EBIT) declined by 20.7 per cent 
to $5.497 billion in the year to June 30, 2006.

Telstra said it had incurred significant costs in executing its 
strategy and had seen margin pressure continue as its revenue mixed 
changed.

Earnings had declined at both the earnings before interest, tax, 
depreciation and amortisation (EBITDA) and earnings before interest 
and tax (EBIT) lines, impacted by an accelerating decline in high 
margin fixed-line or PSTN product revenue as expected.

As previously foreshadowed, Telstra expected revenue growth of 2.0 to 
2.5 per cent compounded annually between now and 2010.

''EBITDA margins have been and will continue to be impacted by 
regulatory outcomes,'' Telstra said.

It expected depreciation and amortisation expense to remain high over 
the next few years as it invested heavily in transforming the network 
and IT base, together with accelerating depreciation and write-offs 
of certain assets that have will be phased out in  2006/07.

Telstra has forecast cash operating capital expenditure in the range 
of $5.4 billion to $5.6 billion in 2006/07.

3G

Telstra chief executive Sol Trujillo said he expects the telco will 
become the market leader in third generation or 3G mobiles in the 
next year.

Mr Trujillo said the 3G market was just as important as wireless broadband.

''A year from now we will be the market leader,'' Mr Trujillo told analysts.

theage.com.au with AAP
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Trujillo dodges dividend decision
August 10, 2006 - 11:47AM
Latest related coverage

Telstra chief executive Sol Trujillo today dodged a question on 
future dividend payouts for shareholders, saying it will be a matter 
for the board.

Telstra appeared to stepping back from a promise made last year that 
shareholders would be guaranteed 28 cents per share in dividends for 
at least the next two years.

Speaking after delivering the telco's full year results, Mr Trujillo 
said that the company is making big investments over the next 12 
months.

He said there are also regulatory issues that need to be taken into 
account when looking at dividend payments.

"I'm making no comment on dividends and we're not going to have 
leverage on the balance sheet," Mr Trujillo told analysts today.

He said that Telstra is looking on how much it will spend over the 
next 12 months and added it will be making significant investments in 
the business.

"We will reserve judgment ... as a board to look at dividends and 
dividend payments," Mr Trujillo said.

AAP



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