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Telstra FY Profit Down 40%

Australian telecom giant Telstra Corp. Ltd. (TLSYY.PK,TLS.AX,TLS) reported that its net profit after tax for financial year 2019 decreased 39.6 per cent to A$2.1 billion from the prior year.

EBITDA decreased 21.7 per cent to A$8.0 billion from last year, hurt by impact of the nbn, with Telstra absorbing around A$600 million of negative recurring EBITDA headwind in the year.

Total income decreased 3.6 per cent to A$27.8 billion, from the prior year.

On a guidance basis, total income decreased 2.6 per cent to A$27.8 billion, EBITDA, excluding restructuring costs, decreased 11.4 per cent to A$9.4 billion.

The company said it is on track to achieve its A$2.5 billion net cost reduction target by fiscal year 2022.

As part of T22 strategy to monetise up to A$2 billion of assets by the end of fiscal year 2020, Telstra reached an agreement to sell three international data centres in Europe and Asia to global private equity firm I-Squared Capital, the owners of Hutchison Global Communications. Telstra expects the transaction to be completed in first half of fiscal year 2020, with estimated proceeds from sale of about A$160 million.

Telstra CEO Andrew Penn said, "Around 75 per cent of the net 8,000 direct workforce role reductions we announced as part of our T22 strategy have now been identified. We have also made progress creating 1,500 new roles in areas like cyber security and software engineering."

The company said it will pay a final dividend of 8 cents per share, comprising a final ordinary dividend of 5 cents per share and a final special dividend of 3 cents per share. Combined with the total interim dividend paid in February 2019, shareholders will receive a total dividend of 16 cents per share for fiscal year 2019, returning more than A$1.9 billion to shareholders.

Looking ahead for fiscal year 2020, the company expects total income to be in the range of A$25.7 billion to A$27.7 billion, underlying EBITDA of A$7.3 billion to A$7.8 billion.

Telstra expects net one-off nbn DA of between A$1.6 billion to A$2.0 billion. It also expects fiscal year 2020 to be the biggest in-year nbn headwind to date, with between A$800 million to A$1 billion expected from the recurring impact of the nbn.

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