In the presentations given by Telstra CEO Andy Penn and CFO Vicki Brady on Thursday, the word 'headwind' appeared in close proximity to the letters NBN 16 times. The intent was clear, NBN had come and taken Telstra's lunch, and was now busy consuming it.
But don't panic just yet dear shareholders, the corner is being turned and FY20 is looking better.
To be clear about what Telstra is squealing about, it is losing money compared to previous years, a lot of money in fact. But it's still making half a billion Australian dollars every three months.
Good work if you can get it.
In the middle of his presentation about how Telstra was reforming itself, and hence cutting a ton of jobs along the way, Penn went to the heart of the matter.
"Telstra's circumstances today are very different from what they were before the NBN," he said. "We are no longer the national wholesale provider -- that part of our business, the revenue and value, is progressively being transferred back to the government via the NBN."
Read: Telstra sees profit plunge 40% for full year
One of the problems with Telstra, as anyone that has sat through one of their retail shareholder days will know from grim experience, is that it is filled to the brim with boomers and retirees who bought into the Telstra privatisation craze that was led by stockbroker-in-chief John Howard and his offsider Peter Costello.
Rather than thinking about the future and undoing one of Hawke/Keating Labor's biggest mistakes in combining Telecom Australia and OTC into a vertically integrated behemoth, the Howard government failed to entertain the thought of structural separation to a proper degree, and proceeded to flog the company into the arms of self-funded retirees and patriotic mum and dad investors.
This was all great for a while: The government got its money to pay down debt and pork barrel to the middle class, and investors got fat on Telstra's dividends.
However, a 40% profit decline and its accompanying dividend reduction is exactly what those investors don't need nor want at the moment.
With the global economy having a spasm thanks to a possible crackdown in Hong Kong and the sort of economic retaliation something like that would bring, alongside Washington continuing its tit-for-tat tariff battle with Beijing that could hurt both economies long before a full resolution is found, those Telstra investors have been left looking at the hole on their income statements that used to be filled with franking credits.
It's almost as though someone wished on a monkey paw at the May election to keep franking credits, but then the paw went ahead and tanked the global economy to make sure companies were handing over as little money as possible.
See also: NBN reports positive full year EBITDA once Telstra payments excluded
On the other side of the equation, NBN worked out how to massage its reported results so it had at least one number not in red ink.
Excluding the AU$2 billion a year that NBN currently pays for access to Telstra's exchanges, pits, and ducts, NBN says its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is AU$608 million. Penn said on Thursday the AU$2 billion was cheaper than if NBN had constructed it all from the ground up, but Penn also omitted that if Telstra was not vertically integrated in the first place, then Australians wouldn't need to pay for access to assets they previously owned.
However, once those payments to Telstra and depreciation and amortisation are factored in, NBN finds itself in the hole with a AU$3.9 billion EBIT loss to its name.
NBN CEO Stephen Rue continues to repeat that the network will be finished on time and on budget, and the company will welcome the increase in average revenue per user (ARPU) from AU$44 a month to AU$46.
But another AU$5 a month will be needed to hit NBN's ARPU target of AU$51.
Driving that increase is enterprise takeup of NBN services, which contributed AU$388 million to NBN's AU$2.83 billion revenue total.
Speaking to analysts on Thursday, Penn said Telstra wasn't expecting the NBN to divert capital into chasing business customers, and the impact of NBN gaining a piece of Telstra's enterprise lunch is now higher than planned. This is quite the observation since it has been perfectly clear for years that NBN would not be able to hit its ARPU target on residential customers alone, leaving the question of what else Telstra has been blinkered towards if it couldn't see this obvious train coming.
The pair of results were also a continuation of a skirmish between the pair of companies in recent weeks, with Telstra and NBN pointing fingers at each other over who is to blame for their respective woes.
It should not be shocking that Telstra is complaining that its golden goose is being taken away -- one it shouldn't have had in the first place in its current form. Equally, it should not be shocking that a surplus-obsessed government continues to force NBN to squeeze every last drop out of the CVC charge and Australia's broadband retailers.
A look at the latest ACCC Wholesale Market Indicators Report shows what Telstra is in fear of losing.
After having an iron grip over the country's hybrid fibre-coaxial (HFC) market after winning the cable war of the early 2000s, Telstra currently has 38% of the HFC market. That is far below the 48.6% overall market share Telstra commands across NBN technologies, so that means Telstra has lost a great number of customers.
One irony to think about is that the make up of the NBN is probably not that dissimilar to a world where Telstra was separated in the 90s, when the new wholesale company proceeded down the technology line of HFC, fibre-to-the-node (FttN), and then onto fibre-to-the-premise (FttP).
NBN disclosed on Thursday it has 1.31 million FttP active connections, 2.71 million active FttN premises, 227,000 customers on fibre to the curb, almost 900,000 on HFC, and 285,000 on fixed wireless, and 95,500 on satellite.
But the difference between that parallel universe and this one, is that as New Zealand and the United Kingdom -- two countries that separated their dominant formerly government-owned telco monopoly -- head into a future where 10Gbps connections will be available more often than not, Australia will remain a bickering laggard.