Australia’s leading telecommunications company, Telstra, has announced the suspension of its plans to sell a stake in its infrastructure unit, InfraCo Fixed.
Currently, Telstra InfraCo has 250,000 kilometres of fibre optic cable, 370,000 kilometres of ducts, 160,000 poles, and thousands of fixed network facilities including data centres, cable landing stations and satellite ground stations. Telstra InfraCo supports Australia’s fixed and mobile networks, and has access to 400,000 kilometres of sub-sea cables enabling greater connectivity.
This decision comes on the heels of a robust 14 percent surge in its fiscal 2023 profits, as well as higher projected underlying core earnings. Telstra’s decision to retain ownership of InfraCo Fixed is based on its integral role in achieving the company’s long-term strategic goals.
Telstra’s CEO, Vicki Brady, expressed the company’s consideration of alternatives before reaching the conclusion that the most value for shareholders would be generated by maintaining the current ownership structure of InfraCo Fixed, at least in the medium term. The unit recorded a noteworthy 4.1 percent increase in annual income, reaching A$2.56 billion ($1.64 billion), which contributed 11 percent to Telstra’s overall income of A$23.25 billion.
In its strategic roadmap, Telstra aims to achieve net cost reductions of A$500 million and mid-single digit growth in underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) through to the fiscal year 2025. The company’s projections for fiscal 2024 anticipate underlying EBITDA between A$8.2 billion and A$8.4 billion, surpassing the A$7.86 billion recorded in the previous year.
Vicki Brady acknowledged the challenge posed by high inflation to Telstra’s cost-reduction goals, but emphasized the company’s commitment to achieving the majority of its targets by fiscal year 2025. She reaffirmed Telstra’s dedication to meeting its FY25 underlying EBITDA and EPS growth objectives.
The announcement follows Telstra’s recent decision not to appeal an Australian Competition Tribunal ruling that prevented an asset transfer deal with its competitor, TPG Telecom. Telstra’s mobile business income demonstrated a robust 8.3 percent increase, reaching A$10.26 billion. Notably, revenue from postpaid handheld services grew by 6.9 percent to A$5.39 billion. The company’s profit for the period was A$1.93 billion, reflecting an improvement from the A$1.69 billion reported in the previous year.
Telstra’s strategic decisions are indicative of its proactive approach to navigating a dynamic telecommunications landscape while maximizing value for shareholders. The company’s fiscal 2023 performance underscores its resilience and strategic focus amidst challenges and opportunities in the industry.