September 5, 2018 / 10:41 PM / 7 months ago

UPDATE 2-Australia's Telstra jumps after guidance cut smaller than expected

* Govt network rollout delay to hurt FY19 revenue by A$300 mln

* Trimmed guidance still above analyst forecasts

* Shares rise 3 pct (Recasts, adding market reaction and analyst quote)

By Tom Westbrook

SYDNEY, Sept 6 (Reuters) - Australia’s largest telecom firm Telstra Corp Ltd cut its guidance on Thursday, citing delays in broadband rollout, but its shares rose as the revision was smaller than feared.

Telstra has been under pressure from shareholders — its shares trade near 7-year lows — as competition and new technology hammer the firm’s mainstay fixed-line businesses.

Construction of a government-owned broadband network, which will replace Telstra’s copper wire system, is running behind schedule, Telstra said, and will delay compensation payments and other income it had expected from the new system’s operator.

That will reduce revenue by A$300 million ($215 million) and earnings by A$100 million in this financial year, Telstra said in a statement, though it expected to recoup the lost income eventually.

“People were expecting, perhaps, a much worse outcome, but at the end of the day, it’s just a timing issue. Any dollar that they don’t get this year they’ll get it next year,” said Morningstar analyst Brian Han.

“The sentiment is so bad that over the past six or 12 months all they’ve been expecting is bad news from Telstra, so when there’s no news, that’s actually good news,” Han added.

Telstra shares rose 3 percent by 0410 GMT to A$3.12, but were still below their 1997 listing price of A$3.30. The broader market fell 1 percent.

Telstra said it now expected 2019 earnings, excluding restructuring costs, of between A$8.7 billion and A$9.4 billion and revenue between A$26.2 billion and A$28.1 billion.

Both ranges skewed higher than average analyst forecasts for earnings of A$8.9 billion and revenue of A$26.1 billion, according to Thomson Reuters I/B/E/S.

Telstra posted its weakest annual profit in six years last month, and unveiled a plan to slash 8,000 jobs - a quarter of its workforce - as well as flagging asset sales as part of a strategic reset aimed at reviving its fortunes. ($1 = 1.3933 Australian dollars) (Reporting by Tom Westbrook in SYDNEY and Aaron Saldanha in BENGALURU Editing by Leslie Adler and Darren Schuettler)

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