Telstra profits fall 13 per cent but digging out old tech nets $110m

Profits at Australia’s biggest telco have been slashed 13 per cent, but Telstra is still getting value from one particular pursuit.

Telstra’s profits have fallen 13 per cent despite 500,000 new mobile customers coming on-board.

The telco giant posted its annual results on Thursday morning, showing profits slipped to $1.78bn.

Just months ago, Telstra set in motion moves to cut 2800 jobs as part of trying to find $350m of savings. The last of those staff to lose their jobs will leave the business in September.

But the company has recovered $110m this year from the ground, digging out 17,000 tonnes of copper from its old networks. Last year $101m of copper was dug out and sold.

Telstra has posted an annual net profit of $1.79bn - down 13 per cent on last year.

In a teleconference with analysts and media on Thursday, Telstra executives thanked the NSW and Victorian police in particular for cracking down on copper thieves.

Thursday’s full-year results come shortly before previously announced mobile plan price hikes kick in.

Last month Telstra announced it was hiking prices on most of its mobile phone plans – above the inflation rate. The price hikes kick in from late-August.

Telstra chief executive Vicki Brady was asked if the telco was pushing plan prices to the limits of what consumers would be willing to pay to deliver returns for shareholders.

Ms Brady rebutted that 16 million Australians benefited from Telstra dividends – 1.2 million direct shareholders, the rest through superannuation.

Telstra chief executive Vicki Brady said 16 million Australians benefited from Telstra dividends. Picture: NewsWire / Luis Ascui

More and more people were choosing Telstra’s no-lock-in contracts, and revenue per user grew less than inflation at 2.9 per cent, Ms Brady said.

“We’ve made those (price) choices very carefully … we continue to invest heavily to meet the expectations they (customers) demand,” Ms Brady said.

More than half-a-million new “handheld” customers came on-board with Telstra in the past year, it says in the results, but the executives and the board will have a close eye on the business’ fixed enterprise arm.

“While most parts of our business performed strongly, fixed enterprise is clearly a long way from where we need it to be,” Ms Brady writes in the results.

“We commenced action during the year to address challenges in our enterprise business, and took additional action on cost overall.”

Telstra’s enterprise arm sells handsets, consultancy and other equipment to companies and government. Earnings from fixed enterprise fell by two-thirds.

Contention about the impending 3G network shutdown also loomed over the press conference.

Farming groups in particular have raised concerns about the 3G network being shut down from October 28.

Telstra and Optus have announced an extension of the closure of their 3G networks. All 3G reliant devices are now planned to move to 4G and 5G networks by 28 October 2024 as the 3G networks will commence closure from that date.

If you are not sure if you are impacted, send ‘3’… pic.twitter.com/v8nx1rWH7Q

— GrainGrowers (@GrainGrowersLtd) August 14, 2024

Less than 1 per cent of Telstra’s traffic was on its 3G networks, Ms Brady said, and the shutdown had been communicated with customers for the past five years.

Telstra is spending about $3bn on capital expenditure every year to maintain “business as usual”, it says in the results, and claims 4G and 5G access has been installed in all but a few of the 3G-using areas.

A fully franked 18 cent per share dividend will be paid, up nearly six per cent on last year.

Telstra owns 35 per cent of Foxtel, alongside NewsWire publisher News Corp.

Last week, News Corp flagged it had received interest from a third party in buying Foxtel.

On Thursday, Ms Brady said the telco would entertain an offer.

“If it got to the stage where there was an offer for Foxtel at the right level of value, yes, we would be supportive of that with News Corp, but we’re not at that stage,” Ms Brady said.

Originally published as Telstra profits fall 13 per cent but digging out old tech nets $110m