Thursday, 15 February 2018 10:17

Telstra profits drop on back of Ooyala investment disaster Featured

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Telstra’s profitability has taken a big hit from its disastrous investment in US-based business Ooyala with the big telco reporting profit for the six months to the end of December plunged by 5% to $1.7 billion compared to the previous half year.

The big telco announced last week it has written down by $273 million the value of Ooyala, its US-based intelligent video business, to zero despite substantial efforts over the past 18 months to improve the business performance.

Despite the dampener on the results from the Ooyala disaster, Telstra CEO Andy Penn said today the company was pleased with the strong performance for the half year but acknowledged this was achieved in a highly competitive market with increased competition for mobile and fixed services.

Releasing its half year results today, the big telco also cut dividends to 11 cents a share from 15.5 cents while reporting an increase in subscriber numbers on mobile and fixed.

“The results are in line with guidance and arguably we have seen one of the most dynamic periods the company has ever faced, “Penn said.

andy penn

Telstra chief executive Andrew Penn at Thursday's results announcement.

“We need to do more and do faster. We have a deeper sense of great urgency and we’re stepping up against competition. We are absolutely focused on cost reduction and we will always continue to do more.

“We will accelerate our strategic investment program to build platforms for the future.”

telstra chart

Including the Ooyala impairment, Telstra reported total income for the six months to the end of December was up 5.9%, EBITDA was down 2.5%, and NPAT was down 5.8%. 

The telco reported the interim ordinary dividend represents a 71% payout ratio on underlying earnings excluding impairment, and the interim special dividend a 58% payout ratio on the net one-off NBN receipts in the half.

And, it says the interim dividend, to be paid on 29 March 2018 will distribute $1.3 billion to shareholders. 

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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