Telstra expects $300m income hit from NBN delays

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Telstra expects $300m income hit from NBN delays

Partially offset by keeping ADSL alive longer.

Telstra is expecting to take a $300 million hit to its income in the current financial year as a result of slower than expected progress of the national broadband network.

The telco today revised its FY19 guidance in the wake of the new NBN corporate plan being released at the end of August.

It forecast an income range of between $26.2 billion and $28.1 billion, down from the earlier guidance of between $26.5 billion and $28.4 billion.

However, it is expecting only $100 million of that income downgrade to flow through to its earnings before interest, taxation, depreciation, and amortisation (EBITDA).

This is in part due to the fact it can prolong revenue from its own wholesale network in that time, while also reducing its NBN costs to connect and wholesale access payments to NBN Co.

Prior results both from Telstra and those that rely on it for ADSL connections have shown the legacy copper network has higher in-built margins for all players in that ecosystem.

NBN Co’s new corporate plan revealed 1.2 million premises that were meant to be declared ready for service in FY19 would be pushed back.

Telstra said that the delays would result in about $200 million of expected one-off migration payments being made in future years instead.

Based on NBN Co’s forecasts, these payments would likely come in 2020 when the network builder is still forecasting completion of the project.

In its last financial year, Telstra copped a $735 million hit due to the sales freeze on NBN Co's HFC network between December 2017 and late April 2018.

Telstra is restructuring its operations in large part to offset future revenue losses under the NBN model.

The telco flagged back in May 2016 that the NBN would have a negative impact of $2 billion to $3 billion on future earnings before interest, tax, depreciation and amortisation (EBITDA) a year.

It managed to “absorb” $1.4 billion of the $3 billion negative impact in its FY18 results.

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