Belong drives Telstra network additions in lean first half

Coming off the back of a horror full year, Telstra's value brand is picking up the slack.

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Image: Chris Duckett/ZDNet

Telstra's pitch to price-sensitive consumers, Belong, is bringing customers into the Australian telco's orbit, the company's half year results show.

In the six months to 31 December 2019, Telstra added 137,000 retail postpaid mobile services to its network, 91,000 of which were from Belong. Similarly, the telco had net additions on its fixed network of 27,000, with Belong being responsible for 44,000 additions.

"Belong now has over 600,000 services, including almost 340,000 mobile services and around 300,000 fixed," Telstra CEO Andy Penn said on Thursday.

"One of the features of the half year was increased activity in the price-sensitive end of the market with strong performance in Belong and wholesale when compared to Telstra branded."

Overall for the telco, revenue was down 3.4% to almost AU$12.16 billion, with earnings before interest, tax, depreciation and amortisation (EBITDA) up 12% to AU$4.77 billion, EBIT down 3.1% to AU$2 billion and overall profit was down 6.4% to AU$1.15 billion.

For its 2019 full-year results, the telco reported revenue was down 3.6% to AU$27.8 billion compared to last year, EBITDA shrunk 21.7% to AU$8 billion, and net profit was cut by 40% to AU$2.1 billion.

Telstra said on Thursday it was most of the way through its job-cutting program that forms part of its T22 strategy.

"As at 31 December, we had announced 6,900 of the net 8,000 direct workforce role reductions of which 6,300 had left the company, and we have also reduced our indirect headcount by approximately 8,000 in the last 18 months," Penn said.

"At the same time, we continue to build new capabilities for the future creating 1,500 new roles in new areas including cybersecurity, software engineering, data analytics, and AI. 1,300 of these have already been appointed."

Restructuring costs for the half year amounted to AU$200 million.

Telstra noted that it had lost 94,000 customers on its Foxtel from Telstra product, with 52,000 leaving in this half alone.

Penn said the cost to the telco of addressing issues caused by Australia's black summer of bushfires was around AU$50 million, with AU$10 million of that being put into assistance packages to firefighters, customers, and matching staff donations.

Echoing comments from last month, Penn said over 90% of towers outages were due to loss of power.

"Ultimately, I think we only lost five sites, basically, out of hundreds that could have been impacted. We still have 20-odd that we're continuing to support with temporary generators," he said.

Broken down by business unit, consumer and small business saw revenue decrease 2% to AU$7 billion for the half year and EBITDA decrease almost 14% to AU$2.56 billion; enterprise had a similar revenue drop to AU$3.9 billion, with steady EBITDA of AU$1.6 billion; networks and IT saw revenue jump 29% to AU$44 million as EBITDA increased 2.5% to minus AU$845 million; InfraCo saw revenue drop 11.5% to AU$2.2 billion, with EBITDA dropping by 13.4% to AU$1.4 billion.

As Telstra was announcing its results, a new competitor entered the fray, with the Federal Court approving the merger of TPG and Vodafone.

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