Telstra shares slip on result
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Telstra chief Ziggy Switkowski is pleased with the half-year result but will not change full-year forecast.
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SYDNEY, Australia (CNN) -- Australia's biggest telecommunications carrier, Telstra, has almost doubled its half-year net profit to Aust. $2.3 billion ($1.8 billion) on the back of a cost-cutting program.
At midday Thursday, Telstra's share price on the Australian Stock Exchange is down 1.66 percent to A$4.74.
Telstra said it would lift its interim dividend 8 percent to A$.13.
Underlying sales revenue for the six months to December 2003 was down 0.1 percent to A$10.5 billion, while total underlying expenses fell 1.8 percent to A$7.1 billion as Telstra enforced its two-year goal to reduce costs by A$800 million.
The sharp rise in net profit reflects the impact on the previous result of A$1.1 billion from the non-cash writedowns on its investment in Hong Kong-based communications carrier Reach.
Telstra's underlying net profit after tax rose 5.7 percent to A$2.1 billion. Earnings per share increased to 17.9c.
Telstra is Australia's largest technology company and is owned 51 percent by the government.
There have been two share offers since 1997 and the Liberal coalition government's policy is to sell its remaining equity. That policy is not supported by the Labor opposition and minor parties.
CEO Ziggy Switkowski said he was pleased with the cash flow result, which was 18 percent higher to A$1.8 billion.
"The overall net operating cash flow generated in the half was A$2.9 billion, reflecting the strength of Telstra's operations," he said.
Telstra reported an earnings before interest and tax (EBIT) increase of 38.1 percent to A$3.5 billion, from reduced expenses.
Domestic revenue growth of 1.8 percent was driven by the popularity of its mobile services, which increased revenue 6.4 percent or A$115 million.
While fixed line revenue was flat, Telstra's cell phone business grew in terms of minutes, rising 16.1 percent. Mobile time revenue was up 6.4 percent from nearly 7 million customers.
Telstra mobile coverage increased during the period. The company built an average four base stations a day to take the total to 7,157 -- a jump of 18 percent.
Call-time on GSM phones rose 13.2 percent and CDMA was up 25 percent.
Online subscribers increased 25 percent. Its broadband service, BigPond, more than doubled its base while the number of narrowband customers rose 6.8 percent.
During the last half of 2003, Telstra completed a A$1 billion share buy-back as part of a capital management program.
Switkowski said the result provided no reason to change his full-year guidance on prospective profit and revenue growth.
