Australia's Telstra Sticks With Fiscal Year Guidance

SYDNEY -(Dow Jones)- Australia's largest telecommunications company Telstra Corp. said Friday it is sticking with its full year guidance for earnings before interest and tax.

In a statement the company said it expects EBIT for the fiscal year ending June 30 to grow by 2%-4%.

Separately, Telstra said the company has got off to a good start to this fiscal year, reporting sales revenue growth of 3.3% for July and August while EBIT fell 8.6%, which was better than its forecast for a 17%-20% decline.

The company is sticking to most of its growth forecasts out to fiscal 2009-10 with the exception of earnings before interest, tax, depreciation and amortization. It now expect EDITDA to grow 2%-2.5% a year, down from previous guidance of 3%-5% a year.

Telstra has also downgraded its EBITDA margin forecast to 46%-48% by 2009-10 because of higher cost growth. Its previous margin guidance was 50%-52%.

The company expects revenue growth of 2%-2.5% a year to fiscal 2009-10 and cost growth of 2%-3% a year. No specific revenue details were given.

Its target to fiscal 2009-10 for capex to sales is 10%-12% of revenue and by 2009-10 it expects to have cut its workforce by 12,000.

Free cash flow should be A$6 billion to A$7 billion by 2009-10, Telstra said.

"Telstra is already turning the corner and we will record more impressive earnings growth as the one-off costs associated with new investment, redundancy and restructuring, and accelerated depreciation begin to subside later in the fiscal year 2007," Chief Executive Officer John Stanhope said in the statement.

-By Sydney bureau; 61-2-8235-2950; djnews.sydney@dowjones.com
-Edited by Graham Morgan

(END) Dow Jones Newswires"

Posted to the site on 6th October 2006