Telstra's profit at $4.1B for 2009

Telstra's financial results for 2009 are strong but transformation plans slow down.

David Thodey, chief executive officer at Telstra, said in the past fiscal year the telcos net profit grew 10.3 percent to $4.1 billion and the company generated a cash flow of $4.4 billion, a 13 percent increase on the prior year.

He said Telstra's results were in line with its previous guidance. 5.3 percent earnings before interst growth is slightly above the expectations it outlined in February.

Telstra saw a rise in key product areas, with 10 percent mobile services growth and 25 percent growth in IP access revenue more than offsetting declines in traditional fixed-line voice revenues.

Total revenue grew 2.7 percent to $25.5 million, excluding the impact of the sale of KAZ in April, total revenue grew by 3.0 percent.

Total operating expenses grew by only 0.6 percent to around $14.7 million - the slowest rate of expense growth in six years.

Operationally, the business performed well across all segments and products. Key operational highlights for fiscal the fiscal year included wireless broadband revenue grew 69.2 percent to $587 million, with customer numbers almost doubling to more than one million; fixed-line retail broadband revenue grew 15.9 percent to around $1.5 million.

Sensis revenue grew 5.8 percent to around $2.2 million, which included positive revenue growth in the Yellow Pages print business.

Total workforce reduced by nearly 3,000. Excluding acquisitions and divestments, Telstra has reduced headcount since 2005 by 11,665, against our 2010 target of 10-12,000.

Telstra's retail business again had a strong year, achieving 3.4 percent revenue growth, in contrast to a 5.1 percent decline in wholesale revenue.

The telco's Enterprise and Government segment was the growth in IP access revenue, with a 23.3 percent revenue increase in fiscal 2009 more than offsetting the decline in traditional legacy data products.

However Telstra's consumer segment was affected by the economic slowdown with mobile services revenue growing by 8.7 percent, said Thodey.

Mobile services revenue was also strong in the Telstra Business segment, which recorded double-digit growth of 11.1 percent.

Thodey said for the year ahead it's well positioned to face challenges.

"On the issue of the National Broadband Metwork, we are now engaging constructively with the Federal Government, as well as the new NBN Company," he said.

"On the economic front, we expect an extended period of slow growth.

"Competition remains intense, but we will continue to invest in networks and services that will differentiate our offerings and deliver value to our customers."

However Nathan Burley, principal analyst at Ovum, said Telstra's full-year results shows the reality of transformation hits.

The Transformation plan was announced in late 2005 involving a massive IT upgrade by Telstra chief executive officer Sol Trujillo.

"It is now clear benefits of Telstra's five year transformation program will be slower to flow through to bottom line than originally envisioned," he said.

"The reality of transformation has hit and Telstra's transformation will remain a tough on-going challenge", said Nathan Burley, analyst based in Melbourne.

Telstra offered a more frank assessment of its IT network transformation, from which payback will now still largely occur in years beyond FY10.