Telstra profit slumps 13% because of corporate trouble

Telstra profit slumps 13% because of corporate trouble is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• Telstra’s struggling fixed-line enterprise business hit the operator’s full-year earnings, with full-year net profit down 12.8%.
• Ongoing cost reductions in the corporate business are expected to help sustain annual underlying EBITDA growth in the new year.

OUR TAKE
Telstra’s aggressive price cuts and focus on artificial intelligence have hit its margins hard, dropping them to their lowest point in several years. While its chief executive has high hopes for a shift to Robotaxis and AI-driven projects, it is now putting pressure on the financials. As competition intensifies, Telstra must balance its visionary goals with financial stability to maintain investor confidence.
— Iydia Ding, BTW reporter

What happened

Telstra‘s struggling fixed-line enterprise business hit the operator’s full-year earnings, with full-year net profit falling 12.8% to $1,193 million. Revenues for the 12 months to June 2024 increased by 1% to $15 billion. The operator recorded a non-cash asset impairment of $199 million related to the previously announced Telstra enterprise relocation. Earnings before interest, taxes, depreciation and amortisation (EBITDA) were $4,971 million, down 4.2%. The impairment also included restructuring costs associated with the operator’s May job cuts, which overshadowed solid mobile growth.

Despite the drop in profits, the Australian operator raised its annual dividend by 5.9% , based on underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth after one-off charges. Ongoing cost reductions in the corporate business are expected to help annual underlying EBITDA grow from $8.2 billion last year to $8.5-8.7 billion in the new year.

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Why it’s important

As Data and Connectivity (DAC) and Network Applications and Services (NAS) evolve, Telstra’s business revenues must strike a balance between innovation and financial prudence. The trajectory of the next few quarters will demonstrate its resilience and ability to adapt in a highly competitive market.

Record low margins and a sharp decline in earnings have taken their toll on the company’s aggressive price cuts to stimulate demand. The focus on artificial intelligence projects, while promising, has strained finances even further.

The vision of a more efficient future through the development of new technologies is enticing, but the financial reality is grim. Delays in launching new ventures and restructuring costs paint a challenging picture. Investors are rightfully sceptical, and visionary commitments require tangible results.