Telstra delivers customer, revenue and profit growth in FY13

Media Release, 08 August 2013
  • Total income increased by 1.9 per cent to $26 billion
  • Net profit after tax increased 12.9 per cent to $3.9 billion
  • 1.3 million new domestic retail mobile customers added during the year
  • 14 cent fully franked dividend confirmed (28 cents for the full year)

Telstra has delivered revenue and profit growth as well as adding 1.3 million new domestic retail mobile customers during financial year 2013.

Telstra also confirmed a 14 cent fully franked dividend bringing the total dividend to 28 cents per share for financial year 2013, a return of $3.5 billion to shareholders.

Chief Executive Officer, David Thodey said the result was an endorsement of Telstra’s strategic direction.

“Our strategy around improving customer service, as well as focusing on our growth businesses is working. I am pleased that we have once again delivered on our commitments and met our guidance, at the same time as continuing to simplify our business,” said Mr Thodey.

Mr Thodey said Telstra continued to lead in mobile growth with total domestic retail mobile customers increasing to 15.1 million and mobile revenue rising by six per cent to $9.2 billion.

“We have been able to deliver the third consecutive year of significant customer growth as a result of our focus on improving customer service as well as continued investment in the network.

“We know our customers value extensive coverage, fewer drop outs on calls and reliable mobile data speeds and we invested $1.2 billion in our mobile network during the year to deliver on this. This investment includes expanding the reach of our 4G network which now covers 66 per cent of the population and is on target to reach 85 per cent by the end of the year,” said Mr Thodey .

Telstra continued to build momentum in its Network Applications and Services (NAS) portfolio. NAS revenue increased by 17.7 per cent for the year and included the commencement of a $1.1 billion six year contract with the Department of Defence as well as international agreements with Jetstar and Fitness First.

“Part of the NAS growth strategy is to expand into international markets, particularly in the Asian region and as we announced in July, there are discussions underway regarding the establishment of delivery centres in conjunction with industry partners located in India. This is important for us as we leverage our Asian network assets to deliver NAS service offerings in that region,” said Mr Thodey. 

Key Financial Results

The reported results for the 12 months to June 2013 are:

  • Total income increased by 1.9 per cent or $477 million to $25,980 million;
  • EBITDA increased by 3.9 per cent or $395 million to $10,629 million;
  • Net profit after tax increased by 12.9 per cent or $441 million to $3,865 million;
  • Earnings per share increased by 11.6 per cent to 30.7 cents, bringing the dividend payout ratio to
    91 per cent; 
  • Capex to sales ratio of 14.9 per cent, with capital expenditure of $3,792 million; and
  • Free cashflow decreased by 3.3 per cent or $173 million to $5,024 million.

Free cashflow included increased working capital to support business growth, cash proceeds of $669 million from the sale of TelstraClear and payments of $821 million for spectrum licences.

On a guidance basis* results for the financial year were:

  • Total income increased by 3.3 per cent;
  • EBITDA increased by 4.8 per cent; and
  • Free cashflow of $5,176 million.

Key outcomes against strategic priorities

Improving customer satisfaction

Mr Thodey said Telstra remained committed to improving customer service as its number one strategic priority.

“We are continuing to make it easier and quicker for people to interact with us, with 40 per cent of our customers now doing business with us online.

“Complaints to the Telecommunications Industry Ombudsman have fallen for a third consecutive year and we are focused on implementing key customer service initiatives,” said Mr Thodey.

One of the significant improvements over the past year included an initiative to reduce bill shock. Customers are now notified by SMS of every 20 megabytes of data used when travelling overseas so they can manage their data usage. Another change means that domestically, customers will receive 50 per cent, 85 per cent and 100 per cent data cap usage alerts sooner. This gives Telstra customers more control over their data usage and helps to prevent bill shock.

“Listening to the voice of our customer ensures we remain focused on improving the level of service our customers expect. Customers are telling us we are improving, but that we have a long way to go before more of them become advocates,” said Mr Thodey.

Growth in customer numbers

Telstra’s products and ongoing investment in the network continue to attract new customers. During the year Telstra added:

  • 1.3 million domestic retail mobile customers, including 452,000 mobile broadband customers and 423,000 postpaid handheld customers, to a total of 15.1 million;
  • 173,000 fixed retail broadband customers, to a total of 2.8 million;
  • 238,000 bundled customers, to a total of 1.6 million; and
  • 425,000 Hong Kong mobile customers, to a total of 3.9 million.

Telstra’s 4G network build accelerated during the year, and since launch we have activated more than 2.8 million 4G devices.

PSTN customers decreased by 287,000 or 3.6 per cent to 7.8 million and PSTN revenue declined by 9.5 per cent.

Simplifying the business

Simplification initiatives delivered $1 billion of productivity benefits which were reinvested into the business to support growth in Telstra’s customer base, customer satisfaction initiatives and development of new growth businesses. Aided by cost control and productivity improvements, operating expense grew by only 0.5 per cent.

Productivity benefits were delivered by continued process improvement including supply-chain efficiencies, improving online sales and service capability and effective credit management. Productivity benefits continue to flow from customers transacting online, with more than one million active users on the 24x7 smartphone and tablet app.

Building new growth businesses

The NAS portfolio continues to grow in this strategically important part of the business with revenue increasing by 17.7 per cent to $1,487 million. Double digit growth was reported across all major NAS product categories.

International businesses grew revenue by 16.2 per cent or $243 million to $1,739 million. This portfolio comprises the Hong Kong mobile services (CSL New World) business, the Telstra global connectivity and NAS business and the China digital media businesses, which provide digital media services in automotive, IT and consumer electronics.

Australian media revenue, which includes Sensis, declined by 7.8 per cent. Sensis performed as projected with revenue down 11.4 per cent, with digital media revenue growth of 11.3 per cent being offset by a decline in print revenue which was down 19.9 per cent.

“Sensis continues to be restructured as it transitions from a print to a digital business,” said Mr Thodey.

Telstra established two new business units to focus on growth opportunities, e-Health and global applications.


Telstra continues to progress implementation of its National Broadband Network Agreements with NBN Co and the Commonwealth, and will continue to work constructively in the best interests of shareholders and seek to maximise the value of those agreements as the project progresses.


Telstra has announced that remediation works will recommence from 19 August with additional safeguards in place. This includes requiring relevant employees and contractors involved in this work to undergo additional training in the safe handling and removal of asbestos. There is no material financial impact at this point in time.

Financial Outlook

Telstra expects growth to continue in financial year 2014 and forecasts low single digit total income and EBITDA growth, with free cashflow between $4.6 billion and $5.1 billion. Telstra expects capital expenditure to be around 15 per cent of sales as it continues to build out its 4G mobile network.

This guidance assumes wholesale product price stability, no impairments to investments, and excludes any proceeds on the sale of businesses, the cost of acquisitions and spectrum purchases.

“Our strategic focus remains on improving customer satisfaction, growing our customer base, simplifying the business and finding new growth opportunities. We believe there remains further opportunity to improve operational efficiency while at the same time growing new business opportunities,” said Mr Thodey.

Telstra has confirmed a fully franked dividend of 14 cents per share bringing total dividends per share for financial year 2013 to 28 cents per share. Shares will trade excluding the entitlement to the dividend on 19 August 2013 with payment being made on 20 September 2013. In financial year 2014, as previously announced, the company will return to its previous practice of considering dividends on a half yearly basis, as part of the regular Board process.

* 2013 Income and EBITDA growth on a guidance basis excludes TelstraClear trading results and adjustments on the sale of TelstraClear. Free cashflow on a guidance basis was $5.2b when adjusted for TelstraClear proceeds (+$669m) and spectrum payments (-$821m).