Telstra dividend cut sends shares tumbling

Comparable earnings were up 1.1 per cent Telstra said

Telstra chief executive Andy Penn said the change was needed because the telco's revenue was expected to take a hit of about $3 billion due to the rollout of the national broadband network.

"The scale of the proposed transaction is approximately AU$5 to AU$5.5 billion, with Telstra to retain some equity interest".

As a result, Telstra said it is aiming to "monetise certain NBN receipts" in an effort to support a capital management program.

The proposed scheme is in discussions now between Telstra and the government, NBN, and investors. According to Telstra, Belong has more than 150,000 fixed broadband customers, including more than 70,000 NBN services.

Telco giant Telstra Corporation has lifted its full-year profit by one per cent in a tough market and has flagged a cut to its dividend from next year to fund spending on battling new competitors.

That was 33.8 percent lower than a record profit of A$5.8 billion a year ago.

Additionally, long term payments, which relate to access to Telstra's infrastructure and over the next four years during the roll out, will increase to nearly $1 billion pre-tax per year by the end of the NBN migration period, increasing with inflation over time.

"Importantly we also delivered against our improvement target in the EBITDA margin for Network Applications and Services of three per cent", Penn said. It agreed to sell its fixed-line infrastructure to the Australian government for A$11 billion to help build the NBN.

"These dynamics confirm why we believe our vision is the right vision, why our strategy is the right strategy".

During the year, Telstra Retail made AU$16.5 billion in income; Global Enterprise and Services (GES) made AU$6.3 billion; Telstra Wholesale made AU$2.8 billion; and Telstra Operations made AU$1.2 billion. Retail customer services increased by 218,000 during the year and Telstra now has 17.5 million domestic retail customers.

Industry solutions revenue growth of 66 per cent was driven by nbn and other commercial works, while cloud services growth of 50.2 per cent was bolstered by consulting professional services, key acquisitions and growth in hardware sales, the company said.



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