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Telstra delivers revenue, profit and customer growth in 2011-12
- Total revenue increased by 1.1% to $25.4 billion
- Net profit after tax increased by 5.4% to $3.42 billion
- 1.6 million new Australian mobile customers added during the year
- 14 cent fully franked final dividend confirmed (28 cent dividend for the year)
Telstra today announced results for fiscal year 2012 highlighting growth in revenue and profits in line with guidance, as well as adding 1.6 million Australian mobile customers.
Telstra’s strategy continues to deliver benefits to customers and shareholders, with an increased focus on customer service leading to strong customer retention and acquisition in the 12 months to 30 June 2012.
During the year Telstra invested nearly $3.6 billion of capital, including significant investments in Australia’s largest and fastest national mobile network, extending Australia’s largest 4G LTE coverage to more than 1,000 base stations serving more than 375,000 customers.
Telstra also confirmed a fully franked 14 cent final dividend, bringing the total dividend to 28 cents per share for fiscal year 2012, returning $3.4 billion to shareholders.
“We have seen two years of significant customer growth as our strategy continues to bear fruit. This has translated into strong financial results despite tough domestic and international economic conditions,” Chief Executive Officer David Thodey said today.
“The results of our focus on our customers and simplifying our business can be seen in improved customer feedback. We delivered on our commitments, met guidance and demonstrated greater resilience than other sectors in a challenging market environment.
“We have achieved top and bottom line growth and expect to do so again in the 2013 financial year.”
Key financial results
The reported results for the 12 months to June 2012 were:
- Total revenue increased by 1.1% or $275 million to $25,368 million
- EBITDA increased by 0.8% or $83 million to $10,234 million
- Net Profit After Tax increased by 5.4% or $174 million to $3,424 million
- Capex to sales ratio of 14.2%, with capital expenditure of $3,591 million
- Free cash flow of $5,197 million
- Results included an impairment of $130 million associated with the pending sale of TelstraClear in New Zealand
On a guidance basis  (before impairments, Government NBN Definitive Agreement receipts and regulated wholesale price changes), results for the financial year were:
- Total revenue increased by 1.3%
- EBITDA increased by 2.1%
- Free cash flow was $5,285 million
Key outcomes against strategic priorities
- TIO level 1 complaints relating to Telstra reduced by 26% and consumer call volumes by 21%. Customer service improvements introduced over the last year include a new consumer bill format, making it simpler and clearer for customers to understand charges, the introduction of an application which enables customers to access their account via an Apple iPad® and Facebook and many other operational improvements.
Growth in number of customers
- Telstra’s product offers and network investments continued to attract new customers during the year, adding:
- 1.6 million domestic mobile customers, to a total of 13.8 million;
- 203,000 retail fixed broadband customers, to a total of 2.6 million;
- 336,000 customers on bundled plans, to a total of 1.4 million;
- 475,000 Hong Kong mobile customers, to a total of 3.5 million.
- Telstra’s 4G network build accelerated during the year and now covers approximately 40% of Australia’s population. Customers have activated more than 375,000 4G devices since launch.
- Telstra’s domestic mobile business generated more than one third of revenue. Telstra has added more than three million new mobile customers over the past two years. Mobile revenue growth of 8.5% was achieved while margins increased by three percentage points to 36%.
- Growth in retail broadband partly offset declines in wholesale revenues, which included the impact of regulatory access determinations. Fixed line revenue decline was steady at 6.1%.
- Telstra’s business improvement programme remained on track and delivered benefits in fiscal 2012 of $1.1 billion, enabling reinvestment in customer service initiatives. These benefits included improvements in labour productivity, reduced customer call volumes and growth in online customer interactions.
- Network Application and Services (NAS) revenue grew by 10.5% to $1,263 million, with several significant contracts signed providing a strong foundation for 2013. Major customers signed within the NAS portfolio included the Department of Human Services, Australia Post and NAB.
- Across the Media portfolio, Foxtel’s acquisition of Austar was an important milestone. Sensis revenue declined by 17.7% as the move to online accelerated. Customer response to Sensis’ digital offers improved in recent months across metro and non-metro regions. Excluding Sensis and advertising, digital media product revenue increased 4.7% over the year.
- In the Telstra International Group, which incorporates Telstra’s investments in Asia, revenue grew by 7% driven by growth in the Hong Kong mobile services (CSL) business and global connectivity and international NAS products (Telstra Global), as the company benefited from integrating assets acquired from Reach.
National Broadband Network (NBN)
In March 2012, Telstra finalised the NBN agreements with the Commonwealth and NBN Co, including ACCC acceptance of Telstra’s Structural Separation Undertaking, and commenced providing long term infrastructure access under the Infrastructure Services Agreement (ISA). Telstra recently handed over stage one of the transit network (dark fibre and exchange rack spaces) to NBN Co. The company continues to work collaboratively with NBN Co on the building of its access network. Telstra has also launched retail and wholesale services over the NBN following successful trials in the early release sites.
Telstra ended the year with strong liquidity and excess cash of $1.0 billion, at the top end of company projections. This positions the company well, ahead of expected spectrum acquisition commitments and $3 billion of debt refinancing due in 2013. In addition, over the next two years, Telstra plans to invest around $500 million of excess cash into its mobile network, including LTE, to maintain and extend our network advantage, and into the NBN transit network to bring forward benefits from the NBN agreements.
Telstra is not contemplating capital management initiatives at this time.
Telstra expects growth to continue in fiscal year 2013 and forecasts low single digit total income and EBITDA growth, with free cashflow between $4.75 and $5.25 billion. Telstra expects capital expenditure to be around 15% of sales over the next two years.
Guidance assumes wholesale product price stability, no impairments to investments and excludes any proceeds on the sale of businesses and the cost of spectrum purchases. The foreign exchange impairment on TelstraClear expected on completion is also excluded.
“Our strategy is working and we continue to focus on our priorities of improving customer satisfaction, profitably increasing the number of customers, simplifying the business and finding new growth opportunities.” Mr Thodey said.
As announced in October 2011, it is the company’s intention to maintain a 28 cent fully franked dividend for fiscal 2013. This is subject to the Board’s normal approval process for dividend declaration and there being no unexpected material events.
® Apple and iPad are trademarks of Apple Inc., registered in the US and other countries
 The guidance basis has been reviewed by our auditors.
Reference Number: 202/2012