TELSTRA faces a possible 9 per cent profit fall this financial year as it cuts margins in a ”transition year” to win back market share and arrest long-term downward trends in revenue and customers.
It revealed yesterday a 4.7 per cent fall in after-tax profit from $4 billion to $3.88 billion for the year to June 30, driven by a $504 million drop in revenue from its copper telephone lines.
The sharemarket punished the company for the weak financial result and for predicting a ”high single-digit” profit decline this year.
Telstra shares fell 31¢, or 9.5 per cent, to close at $2.94, their lowest in four months.
The company will focus on winning and retaining customers by improving service, cutting costs and lowering prices. It estimates this year’s revenue will be flattish and that free cash flow could fall from $6.2 billion to $4.5 billion.
”We are making some tough decisions here and they have been debated and thought through for a number of months now because this is a big decision about being more competitive, of really going after customers and that is very important,” chief executive David Thodey said yesterday.
”Therefore, short term, there is an impact.