Australia's Telstra jumps after guidance cut smaller than expected
* Govt network rollout delay to hurt FY19 revenue by A$300
* Trimmed guidance still above analyst forecasts
* Shares rise 3 pct
(Recasts, adding market reaction and analyst quote)
By Tom Westbrook
SYDNEY, Sept 6 (Reuters) - Australia's largest telecom firm
Telstra Corp Ltd cut its guidance on Thursday, citing
delays in broadband rollout, but its shares rose as the revision
was smaller than feared.
Telstra has been under pressure from shareholders -- its
shares trade near 7-year lows -- as competition and new
technology hammer the firm's mainstay fixed-line businesses.
Construction of a government-owned broadband network, which
will replace Telstra's copper wire system, is running behind
schedule, Telstra said, and will delay compensation payments and
other income it had expected from the new system's operator.
That will reduce revenue by A$300 million ($215 million) and
earnings by A$100 million in this financial year, Telstra said
in a statement, though it expected to recoup the lost income
"People were expecting, perhaps, a much worse outcome, but
at the end of the day, it's just a timing issue. Any dollar that
they don't get this year they'll get it next year," said
Morningstar analyst Brian Han.
"The sentiment is so bad that over the past six or 12 months
all they've been expecting is bad news from Telstra, so when
there's no news, that's actually good news," Han added.
Telstra shares rose 3 percent by 0410 GMT to A$3.12, but
were still below their 1997 listing price of A$3.30. The broader
market fell 1 percent.
Telstra said it now expected 2019 earnings, excluding
restructuring costs, of between A$8.7 billion and A$9.4 billion
and revenue between A$26.2 billion and A$28.1 billion.
Both ranges skewed higher than average analyst forecasts for
earnings of A$8.9 billion and revenue of A$26.1 billion,
according to Thomson Reuters I/B/E/S.
Telstra posted its weakest annual profit in six years last
month, and unveiled a plan to slash 8,000 jobs - a quarter of
its workforce - as well as flagging asset sales as part of a
strategic reset aimed at reviving its fortunes.
($1 = 1.3933 Australian dollars)
(Reporting by Tom Westbrook in SYDNEY and Aaron Saldanha in
Editing by Leslie Adler and Darren Schuettler)
First Published: 2018-09-06 00:19:56
Updated 2018-09-06 06:17:44
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