This morning Telstra released its financial results for FY18. Here’s what you need to know.
1. Meeting our financial guidance
On a reported basis Telstra increased Total Income by 3.0 per cent, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) reduced by 5.2 per cent and Net Profit after Tax (NPAT) decreased by 8.9 per cent. This means that our results are in line with guidance.
Shareholders will receive a fully franked final dividend of 11 cents per share, bringing the total dividend for the financial year to 22 cents per share, comprising an ordinary dividend of 15 cents per share and a special dividend of 7 cents per share, in accordance with the dividend policy announced in August 2017.
2. Strong customer growth
We have seen strong subscriber growth, particularly in the second half on the year, adding 342,000 retail mobile customers, 88,000 retail fixed broadband customers, 135,000 retail bundles and 229,000 wholesale mobile services during FY18.
We’ve now increased our customer base in mobiles for 21 consecutive halves, despite intense competitive pressures.
In the nbn market, we added 770,000 connections, reaching a total of 1,946,000 for a market share of 51 per cent (excluding satellite services).
3. Early progress on T22
On 20 June 2018, we announced a new strategy, T22, to lead the Australian market by simplifying our operations and product set, improving customer experience and reducing our cost base.
T22 will deliver six key outcomes covering customer experience, simplification, network superiority, employees, cost reduction and strengthening the balance sheet.
We’ve already made strong early progress on the new strategy, launching new mobile plans with no excess data charges, announcing a new organisational structure, leadership team and operating model. Telstra InfraCo has also been established as a standalone business unit with pro-forma financials provided as part of the financial results.
The new strategy builds on the foundation provided by our up to $3 billion strategic investment in creating the Networks for the Future and digitising the business. We remain on track to realise the benefits of the investment program, with $1.8 billion invested to date, predominantly in Networks for the Future as the company prepares for the launch of 5G.
4. Customer highlights
In the past twelve months we’ve delivered some great new services, products and experiences for our customers.
We held the world’s first 5G data call over 26GHz mmWave spectrum, the first end-to-end call over 3.5GHz spectrum, bringing together the core components from multiple companies required for a real commercial 5G network call. We also established the world’s first 5G-enabled Wi-Fi precinct on the Gold Coast and tested Australia’s first 5G car on the road. Our Sports Live Pass users increased by nearly 1 million to 2.3 million across AFL, NRL and Netball in FY18.
We switched on the 450th mobile base station under the Federal Government’s Mobile Black Spot Program.
We completed an upgrade of the transmission network between Sydney, Melbourne, Brisbane, Adelaide, and Perth, updating it to optical transport technology capable of supporting 8.8Tbps between these CBDs.
And while our Strategic Net Promoter Score (NPS) was flat during FY18, we saw positive movement in the second half. Episode NPS, which measures customers’ assessments of individual interactions with Telstra, improved by five points during FY18.
5. Improving productivity
In June 2018, Telstra announced we would target a further $1 billion annual reduction in underlying core fixed costs by FY22 in addition to the previous stated target of $1.5 billion, meaning underlying core fixed costs will be $2.5 billion per annum lower in FY22 compared with FY16. We expect total costs will be flat or decline in each year from FY18 excluding restructuring costs.
We have delivered against these cost ambitions for the year and are ahead of the run rate required to meet the net productivity target, with underlying core fixed costs declining by 7.0 per cent. For more information on these points and the rest of our financial results, please visit Investor Relations, where you can watch a livestream of our results presentation, read our media release, letter to shareholders, and other material.