Australia’s Telstra sees 4.7 pct drop in profits

Telstra Corp., Australia’s largest telecommunications company, reported a 4.7 percent fall in full-year net profit on Thursday, as Australians continued to drop home telephone lines in favor of mobiles.

The Melbourne-based company’s net profit for the year through June 30 was 3.88 billion Australian dollars ($3.5 billion), down from AU$4.07 billion a year earlier.

The news sent the company’s stock plummeting, with the share price down 8 percent to AU$2.99 in morning trading.

Revenue from Telstra’s fixed telephone lines plunged 8 percent to AU$5.83 billion, as more users gave up land lines — an issue CEO David Thodey dubbed “a significant challenge.” The company plans to offset the continuing losses from fixed phone lines by focusing on new products, such as its Internet TV service, Thodey said.

“Today, the greatest asset that Telstra has is our customer base and we have been losing too many customers,” Thodey said. “I am not going to allow it to continue.”

In June, Telstra agreed to an AU$11 billion deal with the government to build a new national broadband network, which is supposed to give high-speed Internet to 90 percent of Australian homes, schools and businesses within eight years.

But the agreement is still awaiting shareholders and regulatory approval, and Telstra said in its report Thursday that the deal is not a guarantee.

The company said it will pay a 14 cent dividend.

Associated Press