Telstra’s professional services and managed services businesses were among the bright spots in the telco’s enterprise unit, as well as within the overall business as a whole.
In Telstra’s full year FY2022 results, managed services and maintenance revenue grew 10 percent year-over-year to $738 million, while professional services revenue was up 16.8 percent to $439 million. Both segments are part of the telco’s fixed enterprise unit, which saw steady income growth at $3.7 billion, with declines from data and connectivity and calling applications offsetting the growth.
Managed services and maintenance grew off the back of increased sales of cybersecurity services, managed data network and service management to network customers, while professional services was boosted by one-off infrastructure builds in large strategic contracts and digital transformation engagements by services unit Telstra Purple.
Other segments that posted growth were cloud applications, which was up 8.6 percent to $279 million, while equipment sales grew 15.7 percent to $397 million, following strong demand from public cloud and hardware, respectively.
Data and connectivity (DAC) declined 13.3 percent to $956 million, citing competition and “technology change”, while calling applications declined 10 percent to $637 million due to the planned exit of ISDN and legacy fixed line calling products, but was also partially offset by an increase in collaboration communication software.
The company expects DAC will see a “challenged outlook” with competitive pressures from NBN Co’s added fibre business zones, as well as customers moving to SD-WAN and internet away from private dedicated connectivity.
For the overall Telstra business, revenue declined 1.3 percent from $21.6 billion to $21.3 billion, while net profit after tax declined 4.6 percent from $1.9 billion to $1.8 billion. EBITDA declined 5 percent to $7.3 billion. Some of the units that took hits were fixed consumer and small business (C&SB), fixed active wholesale and InfraCo Fixed, relating to costs related to the NBN migration and the disposal of legacy network copper assets.
Revenue from fixed C&SB declined 5.3 percent from $4.7 billion to $4.5 billion during the period, citing a 40.2 percent decline in on-net revenue due to NBN migration and a 0.6 percent decline in mobile income.
Active wholesale income declined 19.3 percent to $477 million, with legacy calling and fixed revenue declining 30.4 percent to $174 million as NBN migration nears completion, which was offset by growth in the NBN reseller business.
Telstra also touted customer growth during the period, with 155,000 new postpaid services in operation, which included a boost from enterprise customers. Wholesale also added 218,000 services, while internet of things (IoT) services grew by 1 million during the period.
In an announcement, chief executive Andy Penn touted the T22 strategy for setting the telco up well to manage through the current uncertain economic climate and created the foundation for growth.
“When we launched our T22 strategy four years ago, we were in part responding to the operational and financial headwinds created by the rollout of the NBN. We were also responding to the technology innovation we could see around us and the growing rate of digital adoption,” Penn said.
“Telstra is a very different company today and while of course there is always more to do, we are much better equipped to face the very exciting digital future ahead.
“While we are by no means immune, the transformational changes we made through T22 have prepared us well to manage through the uncertainty – we are a much simpler, more agile, more efficient, leaner, more customer-focussed and more digitally-enabled business.”
Looking ahead, Telstra expects income (revenue plus finance income) of between $23 billion to $25 billion in the 2023 financial year, and underlying EBITDA of between $7.8 billion to $8 billion. This guidance also includes the acquisition of Digicel Pacific, which was finalised last month.
Last month, Telstra announced a new five-year agreement with Microsoft to bring together its network with Microsoft’s technology to push digital transformation efforts across Australia.
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