Telstra boss Vicki Brady warns new phone sales could slow from cost of living squeeze

Telstra chief executive Vicki Brady believes customers will hold off upgrading their mobile phones while cost-of-living pressures persist. She said it was likely that the rate of new phone sales could cool off due to the current economic uncertainty, despite greater connectivity demands by customers. “People will hold off upgrading their mobile phone,” Ms Brady said. “I think when they’re in an environment where they’re under pressure on cost of living and no doubt are more willing to consider that when things ease a little bit.” Ms Brady made the comments as the telco reported its half-year results, posting a double digit growth in its interim profit largely driven by the mobile business. On Thursday, it posted a net profit to December 31 to $1 billion, an 11.5 per cent rise on the prior corresponding period. But Telstra said its total financial year earnings guidance would be trimmed from an overhaul of its enterprise business, which is underperforming. Reported earnings for the period grew 3.8 per cent to $4b, while its overall income increased 1.2 per cent to $11.7b. Ms Brady in her update said overall momentum in the business was good in mobiles, consumer and small business fixed business and infrastructure. “Our mobiles business remains central to growth and continues to perform strongly, growing EBITDA almost $300 million in the half driven by more customers, ARPU growth and cost discipline,” Ms Brady said. “Our consumer and small business fixed business more than doubled EBITDA largely due to productivity, and our Infrastructure businesses also grew, reflecting continued strong demand for our assets.” Analysts at investment bank UBS said the result was broadly in line with consensus and placed a “buy” rating on Telstra stock. Its share price closed 2.3 per cent lower to $3.90. Ms Brady said the growth in sales has been in part to a population increase in Australia since the pandemic. The sales spike has been across pre-paid and post-paid plans. Telstra has also commenced a full review of its enterprise business and had prompted its earnings guidance to be tightened to between $8.2b to $8.3b. The issues largely stem in its network applications solutions portfolio, with Telstra flagging performance actions would be taken to address cost and revenue. “We are undertaking a full review of the products and services we provide within our Enterprise business, and particularly our NAS portfolio, to make sure they both meet the current and future needs of our customers, and create shareholder value,” she said. Moody’s Investor Service said the weaker performance of NAS was not significant from a credit perspective. Ms Brady added further infrastructure investment would remain a priority for the second half of the financial year. It is also rolling out more instalments of its T25 strategy — including greater connectivity, further fibre roll out in regions such as the Pilbara and greater cyber security protections. The program is now half complete. “We continue to invest in our digital capabilities to help improve customer experience, uplift our productivity, and help industries and businesses to digitise,” Ms Brady said. “Within Telstra, we are now using AI to improve half of our key processes, including to automatically detect and resolve fixed services faults, and to solve customer issues faster.”