Telstra Corporation Limited
ACN 051 775 556
ABN 33 051 775 556
21 August 2006
The Manager
Company Announcements Office
Australian Stock Exchange
4th Floor, 20 Bridge Street
SYDNEY NSW 2000
Office of the Company Secretary
Level 41
242 Exhibition Street
MELBOURNE VIC 3000
AUSTRALIA
Telephone 03 9634 6400
Facsimile 03 9632 3215
ELECTRONIC LODGEMENT
Dear Sir or Madam
Telstra issues revised guidance on financial outlook
In accordance with the listing rules, attached is a copy of an announcement for release to
the market.
Yours sincerely
Douglas Gration
Company Secretary
Telstra’s national media inquiry line is 1300 769 780 and the Telstra Media Centre is located at:
www.telstra.com.au/abouttelstra/media
For news, views and discussion on telecommunications in Australia see
www.nowwearetalking.com.au
21 August 2006 153/2006
Telstra issues revised guidance on financial outlook
Further to Telstra’s announcements of 10 August 2006 regarding its financial results for fiscal 2006,
which included guidance on its outlook for fiscal 2007, and 14 August 2006 regarding the ACCC’s
reduction to ULL access pricing, Telstra is now able to provide revised guidance on its financial and
dividend outlook.
Dividends
The Telstra Board has considered the level of future dividends. In the interests of shareholders, and
despite the earnings impacts noted below, it is the current intention of the Board to declare ordinary
dividends of 28 cents per share for the fiscal 2007 year. This assumes the company continues to be
successful in implementing its transformation strategy and there are no further material adverse
regulatory outcomes during the course of fiscal 2007.
The Board is unable to give guidance on ordinary dividends for the fiscal 2008 year owing to the
remaining uncertainty attached to regulatory outcomes and impacts. However, the Board recognises
the importance of dividends to Telstra’s shareholders, despite the ongoing value destruction caused by
the telecommunications regulatory regime administered by the ACCC.
Of course, the final amount of dividends declared for any year is a decision for the Board to make
twice a year in its normal cycle having regard to, among other factors, the company’s earnings and
cash flow as well as regulatory impacts.
Earnings
As foreshadowed in its 14 August 2006 announcement, following the adverse regulatory decision on
ULL pricing, and by making reasonable assumptions as to the necessary elements, Telstra management
and the Board have now assessed the likely impact of the lower ULL pricing. Telstra’s revised fiscal
2007 outlook is as follows:
• Revenue Growth of 1.5 to 2.0 per cent;
• EBIT growth of plus 2 to plus 4 per cent;
• Underlying EBIT (excluding transformation costs) to be minus 2 to minus 4 per cent;
• Operating cash capital expenditure of between $5.4 and $5.7 billion.
This guidance assumes no FTTN build, a Band 2 ULL price of $17.70 applying for all wholesale
customers for the remainder of fiscal 2007, no additional redundancy and restructuring provisioning
and fiscal 2007 being the largest transformational spend year.
Telstra’s national media inquiry line is 1300 769 780 and the Telstra Media Centre is located at:
www.telstra.com.au/abouttelstra/media
For news, views and discussion on telecommunications in Australia see
www.nowwearetalking.com.au
As explained in the earlier announcements, Telstra’s previous guidance on its fiscal 2007 outlook was
based on a price of $22 per month in Band 2 for ULL access. This was the most reasonable and
reliable assumption at that time, particularly as it was the last price mandated by the ACCC prior to the
issuing of the first Interim Determination on the evening of 11 August 2006, it was the lowest actual
price being paid by customers at that time, and Telstra had been in discussions with the ACCC about
ULL pricing at various levels above those that were contained in the Interim Determination.
Finally, as foreshadowed in the announcement on 14 August, Telstra notes that since Friday 11 August
2006, when the ACCC first issued an Interim Determination at $17.70 per month in Band 2, the ACCC
has issued several other Interim Determinations at the same level and Telstra expects the same
outcome in the remaining Interim Determinations. As explained in our announcement of 14 August
2006, however, Final Determinations are yet to be made by the ACCC, and the actual pricing
mandated by the ACCC in those Final Determinations and their timing is a matter for the ACCC.
Telstra will continue to pursue all available avenues to achieve reasonable regulatory outcomes for the
benefit of all shareholders.
Telstra Media Contact:
Andrew Maiden
Tel: 02 9298 5259
Mbl: 0428 310 700
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