Australia's Telstra sees sharp upturn after weak first half
By Trinity Hizon,WNS Australia Business Correspondent
SYDNEY - Australian telecom giant Telstra expects 37-40 percent growth in earnings before interest (EBIT) in the six months to June 2007 after a weak first half, the company's annual general meeting was told on Tuesday. The current fiscal year will see the largest transformation for the troubled telco, said chairman Donald McGauchie. "As a result, we expect our first-half (to December 2006) EBIT to fall by 17 to 20 percent. However, we expect EBIT to grow in the second half in the range of 37-40 percent," he told shareholders.
"Provided there are no further material adverse regulatory outcomes and we continue to be successful in implementing our transformation strategy, we expect our free cash flow to improve in fiscal 2008 compared with fiscal 2007." McGauchie said the group has taken "some pretty tough medicine" but is now turning around with a change in culture. His comments come as the Australian government is selling down part of its 51.8 percent stake ahead of fully privatising Australia's largest telecommunications company. The retail investor component of the offer ended this week, with the government expected to raise around 11 billion dollars (8.5 billion US) from the sale of about one-third of its remaining stake.
McGauchie said the appointment of American Sol Trujillo in July last year as chief executive of Telstra, together with an expanded and experienced management team, has resulted in improved performance. "This is a significant transformation that your company is undertaking and we are just over one year into it," he said. Telstra's share price tumbled more than 30 percent in a year after Trujillo took over in July 2005 to implement reforms while annual profits dropped more than 25 percent.
posted by wnsworld @ 9:44 PM
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