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Telstra clocks up 16m mobile customers, $4.7b profit

Telstra has reported an AU$4.7 billion profit for the 2013-2014 financial year as the company looks to buy back AU$1 billion in shares.
Written by Josh Taylor, Contributor

Australia's largest telecommunications company Telstra has recorded a 14.6 percent growth in its annual net profit after tax for the financial year ending June 30, at AU$4.7 billion.

Total sales revenue for the year was up 3.4 percent to AU$25.1 billion, while operating expenses increased 4 percent to AU$15.2 billion.

Sales revenue growth was largely driven through Telstra's mobiles, network applications and services, and international businesses, while the company recorded drops in sales revenue for the fixed, media, and data and IP businesses.

In the year, Telstra added 937,000 mobile customers, putting the company's customer base now at 16 million. This includes 5.2 million 4G customers consisting of 3.8 million handsets and 1.4 million mobile broadband devices. The 4G network now covers 87 percent of the Australian population, and CEO David Thodey said the company intends to invest another AU$1 billion in the 4G network in the 2015 financial year.

For fixed line, Telstra saw a decreased loss of retail fixed voice customers losing 278,000 in the last financial year, compared to 353,000 in the year before. Total voice customers now sits at 6.2 million, while total data customers sits at 3 million.

Telstra blamed a revenue decline in data and IP on customers migrating from legacy systems to IP products where there is price competition for Telstra, but the company's NAS business saw a 27.8 percent growth in revenue, up to $1.9 billion for the financial year, with cloud up 32 percent, unified communications up 21 percent, and managed network services up 56 percent.

The company's stake in pay TV company Foxtel also continued to grow, recording a 1.4 percent jump in revenue up to $3.1 billion, and a 5.6 percent growth in subscribers up to 2.6 million. The MOG, AFL, and NRL apps now have a combined 155,000 subscribers.

Income from the National Broadband Network agreements reached AU$640 million for the year, up from $399 million from the previous financial year. This in large part came from the infrastructure access agreements, and the Commonwealth government agreement.

National Broadband Network negotiations

On the National Broadband Network renegotiations, Thodey announced that Telstra and NBN Co have now agreed to a non-binding commercial framework for revised agreements that would allow NBN Co to use Telstra's copper and HFC networks as part of the multi-technology mix model of the NBN proposed by the company late last year following the change of government.

"We share the Government’s objective to finalise the agreements as soon as possible but no date has been set for completion. The current agreements are complex, therefore the shift to a multi-technology model requires careful consideration as to how these agreements need to be modified," he said.

"The teams are working to get the material commercial issues resolved. To that end, we have agreed the non-binding commercial framework around which revised agreements would be built and are now working out the detail.

"The renegotiations are progressing well and the parties are working constructively towards a common goal."

According to Telstra's annual report, the framework would see Telstra potentially progressively hand over ownership of some or all of its HFC and copper network to NBN Co. Keeping ownership of the assets today means that Telstra is somewhat protected against changes in government policy, and Telstra is seeking to ensure that if it does hand over the networks to NBN Co, it is protected against future policy changes, even though Telstra said that the agreement changes wouldn't see Telstra get extra money for handing over the networks.

Telstra will deliver a final dividend of 15 cents fully franked, and the company announced it will have an off-market share buy-back of up to AU$1 billion of Telstra shares funded through the sales of a number of Telstra's businesses including CSL, Sensis, and the floating of Autohome.

There will be a tender process for the share buy-back with tenders closing on October 3, and information to be released to shareholders on the buy-back later this month.

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