Telstra profit surges to $5.78 billion

TELSTRA says it will invest $3 billion in fixing its outage-plagued network after reporting a massive full-year profit result.

Telstra has had a disastrous year of outages.

TELSTRA shareholders are set for a windfall after the telecommunications giant lifted full-year profit 36.6 per cent to $5.78 billion and released details of a $1.5 billion buyback program.

The telco on Thursday said it will keep its final dividend flat at 15.5 cents per security, but confirmed its plan to hand back the bulk of the $1.8 billion profit it made this year on the sale of shares in Chinese car website Autohome.

The buyback will comprise a $1.25 billion off-market buyback, details of which will be announced on September 2, and a $250 million on-market buyback.

“Telstra’s current level of capital is more than what we need in the short to medium term so the return of surplus capital to shareholders is considered appropriate at this time,” chief executive Andrew Penn said.

Telstra also confirmed it will spend $3 billion over the next three years to improve its network, which has been beset by a series of outages this year.

“Work still needs to be done to improve our systems and processes that can cause customer frustration and delay, and to ensure that we consistently deliver a great service experience,” Mr Penn said.

“We know that customers expect more from us as their reliance on smart devices continues to grow. This is why improving the customer experience is paramount, and why network interruptions in the second half were particularly disappointing.”

Profit from continuing operations for the 12 months to June 30 fell 6.9 per cent to $3.83 billion, but Mr Penn said Telstra expects to deliver low- to mid-single digit earnings growth in 2016/17.

TELSTRA’S FY16 FIGURES

* Net profit up 36.6pct to $5.78b

* Total revenue up 11.5pct to $29.7b

* Final dividend unchanged at 15.5 cents, fully franked

Originally published as Telstra profit surges to $5.78 billion