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UPDATE 1-Telstra's interim earnings miss estimates as expenses mount

Published 15/02/2018, 09:01 am
Updated 15/02/2018, 09:10 am
© Reuters.  UPDATE 1-Telstra's interim earnings miss estimates as expenses mount

© Reuters. UPDATE 1-Telstra's interim earnings miss estimates as expenses mount

(Adds details about Ooyala impairment, background, executive quote)

Feb 15 (Reuters) - Australia's biggest telecom company, Telstra Corp Ltd TLS.AX , said on Thursday that its interim profit fell about 5 percent, hurt by higher expenses and an impairment charge related to its U.S. video platform Ooyala.

Net profit for the six months to Dec. 31 fell to A$1.70 billion ($1.35 billion) from A$1.79 billion a year ago, the company said in a statement. The mean forecast of three analysts polled by Reuters had been for the company to record a net profit of A$1.9 billion.

The company said expenses rose by nearly A$1 billion for the interim period.

The company reaffirmed its earnings guidance for fiscal 2018. It had cut its full-year guidance a few months ago after delays in the rollout of a new government-owned broadband network hurt income. government-owned National Broadband Network is usurping Telstra's status as the country's monopoly telecoms wholesaler, and will replace Telstra's copper lines with fibre-optic by about 2021.

The former monopoly telecom has been trying to reinvent itself as a high-tech innovator as its traditional business of selling landlines winds down and more people communicate via mobile devices, and has pinned its hopes on a national 5G network to keep its status as a dominant market player.

Chief Executive Andrew Penn said Telstra was operating within a significant period of change, including migration to the nbn (National Broadband Network), competitive challenges, accelerating pace of technological change and preparation for the transition to 5G.

Telstra had also flagged a A$273 million charge on its U.S. video platform Ooyala, the value of which it wrote down to zero. company declared a total interim dividend of 11 cents per share, comprising of an ordinary dividend of 7.5 cents and a special dividend of 3.5 cents. ($1 = 1.2612 Australian dollars)

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