Telstra admits lower than expected revenue as customers hang onto their handsets

The nation’s largest telco is feeling the pinch as customers hang onto their old phones for longer than usual after it pushed through price hikes.

Less customers are upgrading after Telstra put price increases through to plans. Picture: Brendan Radke

Telstra is feeling the pinch as customers are choosing not to buy new handsets and have started to buy from other providers, resulting in a lower than expected income over the past six months.

The nation’s largest telco had also seen some customers shop elsewhere after CPI increases were put through to mobile plans.

Chief executive Vicki Brady on Thursday confirmed at the company’s half-year results that Telstra had expected higher revenue as many of its customers completed multi-year mobile phone plans.

“We had anticipated more growth in (mobile hardware) and that’s because we have customers coming off their device repayment plans on both 24-month plans and 36-month plans at the moment,” she said.

“We had anticipated revenue to be a little bit higher.”

The company’s chief financial officer Michael Ackland said lower than expected revenue from mobile hardware sales had placed the telco on track to be at the bottom of projected income guidance.

Full year income guidance was reaffirmed at between $23bn and $25bn.

“Firstly, mobile hardware, which despite growing 12 per cent on higher volumes and increased accessories and wearable sales, was below expectations, with customers continuing to hold handsets for longer and more purchasing from external parties,” Mr Ackland said.

The telco has also reported some customers were no longer happy with plans after CPI price increases to mobile plans were introduced last year.

Telstra chief executive Vicki Brady said mobile hardware revenue was below expectations as customer hang onto their old headsets. Picture: NCA NewsWire / Luis Ascui

“We did put the price increase through in our mobile postpaid business for our consumer and small business customers. Yes, you do see how that has some impacts for customers,” Ms Brady said.

“Some customers will choose to move to other brands, they may choose to move to prepaid, it was all within what we expected. That is part of what played out particularly in the first quarter of our first half of the year.”

Ms Brady said between April and May Telstra would measure where CPI is and consider the 12-month CPI rate up until March to consider changes to plan pricing.

Asked if Telstra would look to persuade customers to purchase more handsets from its stores, Ms Brady said the telco would allow customers the right to choose.

“We see customers choosing to buy in lots of other retailers and we think that choice is important,” she said.

“We’re pleased with where we’re tracking in terms of the number of customers choosing to buy devices through us and that’s been a trend we’ve seen over the last few years in terms of people choosing to buy from other retailers as well. So no concerns from us on that.”

The average Telstra customer was now holding onto their handset for three years, Ms Brady said.

“We’re absolutely seeing customers choose to hold on to devices a little bit longer,” she said.

“There’s some customers that are very eager to renew and others that hold on to devices much longer but I think on average we’re seeing about three years at the moment”.

Originally published as Telstra admits lower than expected revenue as customers hang onto their handsets