Telstra on track with $1.1B first half


Telstra's first-half profit for 2001-02 bettered market expectations

CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- Australia's biggest telco Telstra bettered expectations Wednesday with a first-half net profit of Aust. $2.098 billion ($1.1 billion).

That figure, for the six months to December 2001, was down 20 percent on the previous corresponding half, when the result was boosted by a one-off sales gain.

Earnings before interest, tax, depreciation and amortization (EBITDA) grew 3 percent to A$5 billion ($2.6 billion). Revenue grew 2 percent to A$9.625 billion ($5 billion).

Telstra CEO Ziggy Switkowski said the result was better than the flat growth forecast he had made when he reported the 2000-01 annual results last August.

"The half year result shows we are moving in the right direction and we are well positioned to leverage any upswing in the industry," Switkowski said.

Dividend up 38%


Telstra CEO Ziggy Switkowski said mobile growth was a key business driver

Telstra also surprised by declaring an interim dividend of 11 cents a share, up from 8 cents last year, or a 38 percent rise.

Telstra dominates the Australian fixed-line market and is also the leader in mobiles.

Switkowski said growth in mobiles was the big business driver for the first half. Data revenue was down due to competitive price, but volume grew.

Telstra is a partner in Asia with Richard Li's Hong Kong-based PCCW. In October 2000, the two parties formed Regional Wireless Company (RWC) and the wholesale voice and IP data carrier Reach.

RWC, which is 60 percent controlled by Telstra, owns CSL, Hong Kong's most profitable mobile phone operator.

Joint ventures with PCCW

Switkowski said CSL continued to outperform the Hong Kong market in profitability, while the Reach 50-50 joint venture had produced profits "at the low end of expectations".

He said Reach's recent acquisition of the Asian assets of undersea cable operator Level 3 would speed up the carrier's entry into key markets in North Asia.

Reach said in December it would pay a net $80 million for Level 3's Asian assets, including its Tiger undersea cable system linking Hong Kong, Taiwan, Japan and Korea, and a Japan-U.S. cable.

Telstra shares put on 16 cents to close 3 percent higher in Sydney at A$5.50 Wednesday.

On Tuesday they rose 1 cent after Telstra announced that its 50 percent-owned pay-television operator Foxtel had cut a deal with rival Optus on programming and distribution. Foxtel is the market leader in pay-TV, with about 785,000 subscribers.