Telstra cuts income forecast due to NBN

Telstra has confirmed the Australian Stock Exchange that it is reviewing downward by $400 million its FY20 income guidance following the release of the NBN Co’s corporate plan for 2020-23 last week. The plan will be implemented by next year and the clients could enjoy the facilities after the implementation.

The telco said its earlier FY20 guidance providing on 15 August was based on the NBN Co’s corporate plan for 2019, guess that the NBN rollout and relocation in FY20 would be in line with that plan.

But the latest NBN Co-corporate plan cut the number of grounds forecast to be associated in FY20 by 500,000, from 2 million to 1.5 million.

“This change substantially influences the guidance Telstra providing on total income, primary EBITDA and the amount of included in-year NBN headwind, net one-off DA receipts less NBN net cost to link and free cashflow after operational lease payments,” the Telstra statement said.

“This change has also led Telstra to update its FY20 cost decrease target from $660 million to $630 million. Telstra no longer allocate FY20 being the year of peak NBN headwind and now estimations this will happen in FY21.”

 

Telstra has reviewed its total income for FY20 from $25.7 billion to $27.7 billion to $25.3 billion to $27.3 billion, a drop of $400 million. Basic EBITDA has been reviewed from $7.3 billion to $7.8 billion to $7.4 billion to $7.9 billion, a growth of $100 million.
Under a contract reached with the NBN Co, Telstra is paid for each client who moves from its network to the NBN. Under the transformed corporate plan, Telstra will receive $300 million less in NBN Co-payments during FY20.