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Australia's Telstra raises earnings outlook on delayed NBN rollout pain

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Telstra raised its 2020 core earnings guidance on Monday as it anticipates the worst impact of the rollout of a state-owned broadband network to occur later than previously expected.

[SYDNEY] Telstra raised its 2020 core earnings guidance on Monday as it anticipates the worst impact of the rollout of a state-owned broadband network to occur later than previously expected.

Australia's largest telco by market value said it expected 2020 underlying earnings before interest, tax, depreciation and amortisation to be A$7.4 billion (S6.95 billion) to A$7.9 billion, from the previously announced range of A$7.3 billion to A$7.8 billion.

Telstra said National Broadband Network (NBN) Co's corporate plan for 2020 includes a reduction in the total number of premises forecast to be connected during the year to 1.5 million from 2 million.

"Telstra no longer anticipates FY20 being the year of peak NBN headwind and now estimates this will occur in FY21," the company said in a statement.

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Telstra, however, did not change its 2020 guidance for restructuring costs of A$300 million and capital expenditure in the range of A$2.9 billion to A$3.3 billion.

Telstra warned last month that the NBN rollout would cut its 2020 earnings by up to A$1 billion.

Telstra dominates Australia's mobile telephone and broadband markets, but profit from its mainstay fixed-line phone and internet business is dwindling as the NBN replaces a copper system it had monopolised. Telstra must pay to use the new network.

 

REUTERS