Telstra Corporation Limited (ASX: TLS) is involved in the operations of providing telecommunications and information services to businesses, governments, communities, and individuals in Australia and internationally. In FY 2018, the Telstra Corporation witnessed a significant loss in the shareholders’ value and the company is also intending to lay off 8000 staff members. In the light of these events, the shareholders and proxy advisers were questioning the company’s decision to give bonuses at this time, hence they were preparing for a revolt over the executive pay at the Annual General Meeting.
On 16 October 2018, the chairman of Telstra Corporation Mr. John Mullen addressed the Shareholders at the Annual General meeting and defended the company’s performance by pointing out that despite facing significant challenges, the company’s results were in line with guidance and showed strong subscriber growth in both fixed and mobile services. After the release of this news, the Share price of the company decreased by 0.968 percent as on 16 October 2018.
The chairman informed the shareholders that the company’s Earnings Before Interest, Tax, Depreciation and Amortization reduced by 5.2 percent to $10.1 billion, and Net Profit after Tax reduced by 8.9 percent to $3.5 billion as the effect of the NBN on Telstra’s financials escalated.
The chairman also addressed the ongoing disruptions which are faced by the telecommunication industry as many companies are facing huge disruption in their sectors with the rise of digital giants like Amazon, Google, and Netflix and the emergence of online competitors which have destroyed their traditional business models and fragmented their customer base. Telstra is right in the middle of this disruption and the strong profits are disappearing that the company used to make on fixed broadband, home phones, global roaming excess usage charges, the Yellow Pages.
He pointed out that the demand for the newer core products and services continues to grow rapidly and in the long term the strength of Telstra’s networks, assets, balance sheet, and talented people will provide Telstra with a great position of strength to tackle these new challenges head-on.
He also told that he is aware of the concerns that have been raised around the Remuneration Report by proxy advisors and others, which means that a substantial number of shareholders will not approve the report. According to him, in these challenging conditions, the first-class leadership is very important to the company and a number of things contribute to attract, retain and motivate high caliber executives, one of which is remuneration. Especially in the case of attracting the first-class talent from overseas as overseas executives will simply not give up well-paid jobs overseas to join Telstra unless the company is having competitive remuneration strategies.
TLS’s shares traded at $3.070 with a market capitalization of $36.87 billion as on 16 October 2018 (AEST 4:00 PM).
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