According to Ovum, an analyst firm, Telstra's full-year results shows the reality of transformation hits.
Telstra reported strong results for the financial year ending June 2009, with 3% revenue growth, 13% increase of free cash flow to $4.4 billion, and 10% growth in profit to $4.1 billion.
“It is now clear benefits of Telstra’s 5 year transformation program will be slower to flow thru to bottom line than originally envisioned”. “The realty 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. Also although past peak capex spend, there will now be little in terms of ongoing reduction. In addition to effects of the economic slowdown, from which they remain ‘resilient but not immune’, increased investment in customer service, and stronger shift to low-margin products, EBITDA margin guidance was lowered to be now maintained at current levels in FY10. However, Telstra did maintain its central A$6 free cash flow target.
