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Telstra to spend $3bn on network upgrades

Business

Telstra will spend an extra $3 billion on its networks and has confirmed it will return $1.5 billion to shareholders in a buyback after its annual profit jumped 36.6 per cent to $5.78 billion.

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Chief executive Andrew Penn said Telstra “must invest to set new standards and deliver excellent experiences”.

Penn and the group’s customers and networks, which have suffered seven outages since February, were its “biggest assets”.

The network spending, over three years, would “deliver business benefits such as capital efficiency, reduced operating costs and increased revenue”, he said.

Telstra earlier had pledged to spend $250 million on network improvements in response to the string of service outages.

Looking ahead, Telstra said it expects low-to-mid single-digit earnings growth in 2016/17.

Telstra’s mobile business, the biggest in the country, delivered a mixed performance.

The telco added 560,000 retail mobile customers but mobile broadband revenue fell 2 per cent, hurt by a fall in customer spending and regulatory changes to the amount operators can charge each other to connect customers.

Revenue for the group’s fixed business, made up of telephone and broadband, fell 2.2 per cent as fewer customers made landline calls.

On the crowded fixed broadband front, Telstra added 235,000 domestic retail customers.

Connections to the National Broadband Network rose to 500,000, from 289,000.

In May, Telstra said it would return at least $1.5 billion to shareholders following the sell down of its stake in Chinese online carsales business Autohome.

Telstra said today that the return would comprise a $1.25 billion off-market buyback, details of which will be announced on September 2, and a $250 million on-market buyback.

The company’s net profit jumped 36.6 per cent to $5.78 billion, thanks largely to the $1.8 billion gain from Autohome.

Underlying annual earnings – a figure that Telstra says reflects its vast operations – rose 2.6 per cent to $10.5 billion, in line with company guidance.

The rise in underlying earnings was driven by the group’s network applications and services operations, which services the corporate market, chief financial officer Warwick Bray told AAP.

Telstra’s FY16 figures:

-AAP

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