Telstra Cuts Earnings Guidance as NBN Sales Paused

Telstra Cuts Earnings Guidance as NBN Sales Paused”

At the same time, the company's amended total income guidance range is now expected to be between $27.6 billion to $29.5 billion, a reduction of around $700 million.

The company tasked with building the NBN earlier this week said it will suspend the rollout of the hybrid coaxial-fibre (HFC) network from December 11 - for six to nine months - so it can work on measures to make connecting and using the service better, and to improve its reliability.

Finally, its free cash flow will be impacted by an estimated $200 million and is expected to be between $4.2 billion and $4.7 billion in FY 2018.

NBN earlier this week revealed it would cease selling HFC services until it had sorted out performance issues with the technology.

The good news is that management has reaffirmed that it expects its FY 2018 total dividend to be 22 cents per share fully franked.

A pause in the rollout of the network, which was announced by the state-owned NBN Co. on Monday, will delay payments from the company to rent Telstra's ducts and other infrastructure in the financial year, Telstra said.

Telstra said in a notice to the Australian Stock Exchange this morning that it was revising its FY18 guidance also as a result of the NBN Co's corporate plan for 2018.

The ACCC is seeking feedback on a discussion paper detailing Telstra's proposed variation to the NBN Migration Plan to facilitate the rollout of fibre to the curb technology (FTTC).

Telstra has cut its full-year guidance for earnings and revenue on account of the temporary suspension of the national broadband network rollout by NBN Co.

While these changes had not materially affected Telstra's projections, the telco said the cessation of HFC connections pushed its outlook outside the guidance range.

"We're going to work through a number of issues, focused primarily on those customers that already have the service today, and once that is complete, we will advance those improvements to the future areas continuing with the rollout sequence that is already within out systems", he said.

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