By Adwitiya Srivastava
(Reuters) -Australia’s top telecom firm Telstra Group trimmed the upper end of its operating earnings forecast for fiscal 2024 on Thursday even as it reported an 11% jump in its first-half profit due to strong performance across its businesses.
The company now expects underlying operating earnings for the year of A$8.2 billion ($5.32 billion) to A$8.3 billion, compared with the prior range of A$8.2 billion to A$8.4 billion, citing weak performance in its network applications and services (NAS) segment as business customers make fewer traditional voice calls.
The Melbourne-based firm’s first-half profit jumped 11.4% to A$964 million, helped by strong performance in its mobile, fixed line and infrastructure segments. Its mobile business – the biggest revenue contributor – reported a 3.8% growth in sales to A$5.33 billion.
Shares of the company fell as much as 2.5% to A$3.890, their lowest level since mid-August last year. It was trading 1.5% lower as at 2343 GMT.
“It was a lacklustre half-year report from Telstra, with revenue and total income both growing by around 1% and a slightly disappointing outlook for full-year EBITDA,” said Josh Gilbert, a market analyst at eToro.
“The market will likely focus on Telstra narrowing its guidance on full-year EBITDA, which has been attributed to its Network Application Services being a long way from where it needs to be.”
The company declared an interim dividend of 9 Australian cents per share, up from 8.5 Australian cents a year earlier.
Telstra also announced a review of its products and services under its enterprise business, with a “clear set of immediate and significant actions to address performance”.
The review is particularly focused on its NAS portfolio, which is “clearly a long way from where we need it to be”, according to the firm, as the segment logs weak revenue across calling applications and professional services.
However, given the review it is undertaking, the company added it has a positive medium-term outlook for NAS and remained confident in its capabilities and market opportunities.
Telstra, which is focusing heavily on reducing its costs, said it continued to “expect to achieve the large majority of our cost out ambition by the end of FY25.”
($1 = 1.5411 Australian dollars)
(Reporting by Adwitiya Srivastava and Shivangi Lahiri in Bengaluru; Editing by Anil D’Silva and Jamie Freed)