Yahoo Finance Telstra profits nosedive 14.4% after grappling with a triple crisis
Telstra has reported $1.8 billion in net profit after tax for the 2020 financial year, weighed down by the crises of the summer bushfires, the Covid-19 pandemic and the cost of delivering the NBN.
In briefing documents released to the ASX, the telco revealed its $1.8 billion figure represented a drop of 14.4 per cent from the previous financial year.
Total dividends for the 2020 financial year came to 16 cents per share, fully franked, delivering shareholders $1.9 billion.
Telstra chief financial officer Vicki Brady said the company had delivered its results in line with guidance provided to the market.
“This has been achieved despite the ongoing financial headwinds from the nbn, and the operational and financial disruptions caused by both the Covid-19 pandemic and Australia’s summer of bushfires,” she said.
The company estimates the pandemic has had a “negative financial impact” of “around $200 million”.
Supporting bushfire-affected customers, providing free mobile services to firefighters and fixing damaged infrastructure cost Telstra $44 million.
The telco’s economic woes will continue into the new financial year, Brady added.
“With the impacts from Covid continuing to be felt by many communities and its ongoing effects on the global and local economy, we anticipate that we will continue to face disruption in FY21.”
NBN hangs over Telstra
Meanwhile, underlying EBITDA came to $7.4 billion, down 9.7 per cent, with Brady pointing to the “in-year recurring headwind” of the nbn forcing Telstra to absorb $830 million. “We expect FY20 to have been the peak year.”
CEO Andrew Penn said the NBN and price competition presented “economic headwinds”, with the cost of migrating customers onto the national broadband network adding $380 million to its network payments.
“NBN wholesale pricing remains the largest negative impact on our fixed business,” Penn said.
“In Telstra’s case the profitability of reselling the nbn is negligible at best – that is not sustainable.”
The telco giant has also set aside $50 million for potential penalties relating to an ACCC investigation into potential misleading or deceptive misconduct by a few small partner store operators that are Telstra licensees.
The board has also slashed bonuses for “certain executives” – including the CEO’s – by 10 per cent, Penn said.
“[This is] not because they did anything wrong but because they were accountable for the areas of the business where these failures happened.
“This includes me because ultimately as the CEO there is not a part of the business for which I am not accountable.”
Telstra hits pause on 1,100 job cuts
The company is now halfway through its T22 strategy to “radically simplify and digitise the business”. Since its launch in June 2018, the telco has cut more than 20,000 roles, but recruited 1,600 in specialist areas such as software engineering and cyber security.
However, because of the economic fall-out of the pandemic, Telstra in March decided to hit pause on scheduled job cuts for six months.
It’s now extended that time frame to February next year to “give some certainty to our people in what is a very challenging time”.
Earlier this year the telco revealed it had already undergone 6,900 of 8,000 planned job cuts.
“Supporting our people has included ... paid pandemic leave for our casual employees and pausing our T22 productivity job reductions to give certainty and security,” Penn said.
But some jobs may be cut nonetheless, he added.
“We do, however, still anticipate some roles reductions prior to this, for example where projects end or work is no longer required.”
The job cut delay will cost Telstra $100 million.
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