MELBOURNE: Telstra has flagged a financial hit of up to $430 million as a result of recent rulings by the consumer watchdog related to its copper network and wholesale prices for mobile terminating access services.
The telco said the Australian Competition and Consumer Commission’s ruling in August on wholesale prices for mobile terminating access services will result in a $350m hit to revenue in fiscal 2016. It is not expected to materially impact earnings before interest, taxation, depreciation and amortisation (EBITDA).
Meanwhile, The ACCC, in its final decision last week, required a one-off uniform price fall of 9.4 per cent for wholesale access to Telstra’s legacy copper network to provide services. The decision revises the regulator’s draft ruling in June for a 9.6 per cent fall.
Addressing shareholders at its annual general meeting this morning, chief executive Andrew Penn reiterated his disappointment with the ruling of the Australian Competition and Consumer Commission.
“Unfortunately the decision does not follow the ACCC’s fixed pricing principles. These require your company to be able to recover from wholesale customers, the costs of the services we provide to them,” Mr Penn said.
“Any regulated entity should be concerned by this decision, especially in circumstances where the opportunity for a merits review has been removed.”
Mr Penn estimated the decision would see a reduction in reported revenue and EBITDA in fiscal 2016 of up to $80m.
“Needless to say we are extremely disappointed in this decision and will be considering our options for appeal,” he said.
The telco reiterated the guidance provided at its full-year results in August of mid single digit growth in total income and low single digit growth in EBITDA.
Free cashflow is seen between $4.6 billion and $5.1bn.
Earlier, chairman Catherine Livingstone said there was no doubt disruptive digital technologies will continue to drive a global wave of change that will see everyone connected to everything, through smart technologies, smart devices and smart networks.
“The challenge for Telstra – and indeed the challenge for Australia, as a nation – is to harness these many opportunities by focussing on innovation,” she said.
Commenting on recent commentary about whether big business pays its fair share of tax, Ms Livingstone said Telstra paid $1.7bn in Australian income tax in fiscal 2015, which was around 2.5 per cent of total Australian company tax revenue.
