Australia’s leading telecom company, Telstra Corporation Limited (ASX: TLS) is expecting to make a non-cash impairment and write down of the value of its legacy IT assets by around $500 million and restructuring costs for FY19 by around $200 million.
In an announcement made on 29th May 2019, the company announced that it is making good progress on T22 strategy and is ahead of plan on the simplification of its structure and ways of working.
As part of its T22 Strategy, as announced earlier, the company expects a net reduction of around 8,000 employees over the span of three years. Today, the company has started a consultation with employees and representative unions about the same.
By the end of the financial year, the company is anticipating to reduce 6,000 roles and by the end of 2022, is expected to achieve net cost out target of $2.5 billion. On the back of above-mentioned announcements, the company projects its FY19 restructuring costs to increase from around $600 million to around $800 million.
The company assured that the impacted employees will not exit the organisation until the early FY20. It is expected that the consultation process will conclude in mid-June and therefore, the costs will be included in the company’s FY19 results.
As per the company’s CEO, Mr Andrew Penn, the financial impacts brought forward into FY19 were the natural result of T22 and Telstra’s strategic investment in digitization and the company is on track with its T22 program.
Recent Board Changes
On 9th April 2019, the company communicated the appointment of highly experienced, Ms Vicki Brady for the role of Chief Financial Officer and Head of Strategy, making a significant addition to the company’s management. Along with the sound financial background and achievements in telecommunications, Ms Vicki Brady carries an experience of working as Group Executive of Consumer and Small Business, where she worked on developing Telstra’s new go-to-market plans as part of the T22 strategy.
H1 FY19 Results
In the first half of FY19, the company reported a total income of $13.8 billion (reported basis), which was 4.1 per cent lower than H1 FY18. Further, Telstra reported EBITDA of $4.3 billion (reported basis), down by 16.4 per cent on H1 FY18, in line with the expected nbn impact.
H1FY19 Results (Source: Company Reports)
Now, let’s have a glance at the company’s share performance and the returns it has posted in the last few months. In the last six months, the share price of the company increased by 22.25% as on 28th May 2019. At market close on 29th May 2019, the stock of the company was trading at a price of 3.570, up 0.281% during the day’s trade with a market capitalisation of ~$42.34 billion. It has 52 weeks high price of $3.635 and 52 weeks low price of $2.547, with an average volume of ~26,618,896.
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