Australia’s biggest telco has posted a profit surge and hiked its chief executives pay, even as the company slashes 1200 jobs.
In its latest market update, Telstra confirmed net profits after tax came in at $2.4bn, up 2.7 per cent compared to last year.
Just weeks after a major outage angered millions of Telstra customers, it was revealed chief executive Vicki Brady was getting an 11 per cent pay rise, taking her total haul to $6.8m over the past 12 months.
This included a 20 point reduction in Ms Brady’s bonus due to the outage or $607,000.
In total Ms Brady would have received $7.5m if her bonus hadn’t been sliced because of the triple-0 outage.
It wasn’t just Ms Brady that copped a hit, with top executives collectively losing $1.3m cut to bonus payments as a result of the outage.
Meanwhile, staff numbers are being gutted with the workforce shrinking by 4 per cent to 29,334 employees, and redundancies payouts ballooned to $200m.
Ms Brady apologised again for the July 8 outage that wreaked havoc across the country and blocked more than 600 triple-0 calls.
Regional rail networks in particular were hobbled, as were retail payment systems.
“We know we let our customers down in July, and we have taken full accountability for this,” Ms Brady said in the results.
“We have an initial understanding of the root cause of the outage and have taken steps to address that.
“We are completing our investigation with an external expert, and we will be
transparent about those findings and the actions we take as a result.”
Telstra said there has been no significant impact in terms of customers joining or leaving the network since the outage.
Mobile leads Telstra’s results
On Thursday, Telstra announced full-year profits came in at $2.4bn, up 2.7 per cent compared with last year.
The mobile segment was about 44 per cent of Telstra’s income, which was up 3.2 per cent to $11.37bn, due to passing on higher costs to customers last year.
Under the new plans, most Australians with Telstra will be slugged between $3 to $5 more each month on their mobile and internet.
Telstra postpaid mobile plans will jump from $65 to $70.
“Connectivity has never been more important for our customers or Australians,” Mr Brady said.
“We’ve seen for a little while now that the growth has been in the more value conscious end of the market.”
EToro analyst Josh Gilbert said mobile service revenue up 4.8 per cent and cash earnings per share up 14 per cent was exactly what Telstra investors needed to see after the outage.
“The performance matters more than usual because Telstra’s entire investment case rests on reliability, and with July’s outage still fresh, this was the proof point investors needed,” he said.
“The real verdict, though, will come from whether customers stick around.
“Telstra has delivered exactly the kind of result investors own it for – steady and shareholder friendly, with the machine in full working order.”
Details of results
Over the past year, more than 274,000 Australians got a Telstra SIM card, mostly through Telstra’s wholesale business to other telco companies. Revenue per wholesale customer rose 8.8 per cent for the year.
Overall Telstra’s revenue from mobile phones rose 4.8 per cent, with the telco citing rising device prices and wholesale trade as the driver.
Full-year revenue dipped 0.8 per cent, to $22.94bn, while the telco built more than 150 new mobile towers and upgraded “nearly” 1200 towers to 5G.
The results indicated the July outage would not affect customer numbers much, he said.
“Guidance for underlying earnings of up to $A8.8bn in FY27 tells us management isn’t bracing for an outage-driven exodus, although costs are already weighing on mobile margins,” Mr Gilbert said.
Telstra had the cashflow to keep making network investments, pay a 10.5 per cent increased dividend, and issue a $1bn share buyback, Mr Gilbert said.
But he said the effect in the surge in AI investment was still to be
“The quieter part of this result is AI, with Microsoft, Google and AWS all signing long term contracts across Telstra’s fibre and subsea assets, and the Aura network build now more than halfway done even with its price tag creeping up to around A$1.8bn.
“The AI infrastructure boom has largely been a US story for Australian investors, but Telstra is finding its way into the AI trade from the unfashionable end of the ASX.”
Telstra denies bizarre rumour
Ms Brady addressed rumours Telstra was replacing jobs with employees in India as a “strategy to cut costs” at the head office.
She said while they “absolutely have workforce out of Australia”, she was “not aware” of such job outsourcing.
“We make very deliberate decisions on our workforce,” Ms Brady said during the media briefing following the results release.
“They are very considered decisions about what will put us in the best position to be able to deliver for our customers.”
“In terms of, ‘are we deliberately, as someone leaves the organisation, then replacing them in India, with our team there or through a partner?’ – No.”
Ms Brady did acknowledge there were Telstra teams in both India and the Philippines, calling them “two big locations” for the company.