Telstra lowers guidance following NBN corporate plan update

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Telstra lowers guidance following NBN corporate plan update

Telstra has been forced to cut guidance based on the number of houses and businesses being ready for and connecting to the National Broadband Network this financial year being lower than previously thought.

On Thursday, Australia’s largest telecommunications provider warned revenue would come in $300 million lower than previous forecasts. It now expects income in the range of $26.2 billion to $28.1 billion.

Based on those assumptions, guidance for earnings before interest, tax, depreciation and amortisation has been dropped by $100 million to a range of between $8.7 billion and $9.4 billion.

The telco had previously warned investors its guidance was based on its best estimates of the NBN rollout and it would need to revisit once NBN outlined its year ahead, following a tumultuous year for the government-owned business where it faced massive delays on getting the Hybrid Fibre-Coaxial network up and running properly.

Telstra said the NBN 2019 corporate plan includes lower estimates in premises ready for service and premises activated in 2018-19, which has the effect of deferring the payments NBN must make to Telstra each time a premise is declared ready, which will be partially offset by lower costs for connecting customers to the NBN, lower network payments the government-owned business and a longer period wholesale EBITDA on its own network.

Telstra is forecasting NBN one-off payments to be $200 million lower than it previously forecast to between $1.5 billion and $1.7 billion.

“While the lower volumes impact Telstra’s outlook for [2018-19], it is anticipated these changes will be financially positive to Telstra over the full rollout due to the effects of the natural hedge,” Telstra said in an ASX statement.

“The revised [2018-19] guidance assumes operating earnings are otherwise unchanged.”

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