SYDNEY -(Dow Jones)- Australia's Telstra expects to report growth of 4%-6% in earnings before interest and tax for the fiscal year ending June 30, 2007, Chief Executive Solomon Trujillo said Thursday.
In a statement releasing the group's annual results, Trujillo, a U.S. telecoms veteran, said the company expects underlying EBIT, which excludes costs related to his transformation strategy, to be flat to 2% lower for the current year.
Earlier Thursday, the company said net profit for the fiscal year ended June 30, 2006, fell to A$3.18 billion from A$4.31 billion the year earlier.
EBIT for the year fell 20.7%, slightly better than Telstra's 21%-26% guidance range.
The result included a total provision of A$427 million redundancy and restructuring charges as part of Trujillo's five year turnaround plan.
"This result, delivered at the better end of our earnings guidance, reflects the fact that we are on or ahead of plan on virtually all fronts of our transformation," Trujillo said.
"We are still taking the tough medicine but after our strong second half sales performance our competitors are having to take some tough medicine of their own, particularly in the broadband and mobiles markets," he said.
Melbourne-based Telstra said its assumptions for growth assume an unbundled local loop price of A$22 a line. The Australian Competition and Consumer Commission is expected to rule on pricing for ULL, which allows competitors to access Telstra's copper network to offer their own broadband services, in coming weeks.
Telstra added 303,000 retail broadband subscribers in the second half and 620,000 in the full year, significantly outpacing its key rival, Singapore Telecommunications's local unit, Optus.
Telstra's broadband market share rose to 44%, Trujillo said.
It reported strong second half mobile revenue growth of 7.6% and added 261,000 mobiles over the year for a total of 8.49 million, an increase of 3.2%.
It lost 270,000 retail fixed lines, although added 90,000 wholesale lines.
"The shift in revenue from traditional higher margin products and services to new and emerging products and services with lower margins has continued," Trujillo said.
"However, we are tackling this hard and have slowed the (fixed line)decline by integrating services, bundling initiatives and customer win-back programs," he said.
Its EBIT margin declined 7.1 points to 24.2% and earnings before interest, tax, depreciation and amortization margin fell 5.1 points to 44.5%.
-By Lyndal McFarland, Dow Jones Newswires; 61-2-8235-2957; lyndal.mcfarland@dowjones.com
-Edited by Graham Morgan
(END) Dow Jones Newswires "
Posted to the site on 10th August 2006
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