Telstra shares dive to five-year low as Penn applauds decision to halt HFC rollout

Telstra’s shares slid to a five-and-a-half-year low after the telco’s chief praised NBN Co for prioritising user experience.

Supratim Adhikari

Telstra chief executive Andy Penn at Telstra HQ in Melbourne. (David Geraghty/The Australian)

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2:28PMNovember 28, 2017.

Updated 2:49PMNovember 28, 2017

Telstra boss Andrew Penn has weighed in on the stalled rollout of NBN Co’s hybrid-fibre coaxial (HFC) cable saying that the company rolling out the National Broadband Network has made the right call.

Speaking at an American Chamber of Commerce lunch on Tuesday, Mr Penn pointed out that while NBN Co had accelerated the rollout of the network it can’t come at the expense of customer experience.

“I said at our Investor Day earlier this month, it will be important that achieving the roll out schedule does not come at the expense of improving the experience of customers,” he said.

“While there are financial implications for Telstra as a result of this decision, I applaud NBN Co for prioritising customer experience over roll out and taking this action to address a significant customer issue.”

The telco (TLS) is still working through how deep the impact of the delay will be on its books but analysts estimate Telstra could take a 5 per cent hit to its full-year 2018 earnings and force it into a rethink of its dividend policy.

Telstra shares slid on NBN Co’s announcement and were down a further 2.31 per cent to $3.38 in afternoon trading on Tuesday following Mr Penn’s comments.

Penn also took the opportunity to reiterate that while many of Telstra’s customers will switch over to mobile from fixed broadband services when its 5G network is launched, the migration doesn’t make the NBN irrelevant.

According to Mr Penn, a 5G mobile network will not be able to achieve the same level of capacity as the fixed line network due to cost restraints.

“Yes, 5G will definitely enable many customers to switch to mobile in preference to a fixed broadband service at home. But no, 5G will not completely replace the NBN,” he said.

With AAP