Telstra added 292,000 customers on the National Broadband Network (NBN) in the second half of 2016 but margins on those connections are down due to increasing competition in the market. Here's what you need to know.
At today's Telstra half-year financial results (ending December 31, 2016), the telco revealed it has added 292,000 new customers for its NBN services over a six-month period. It now has 792,000 NBN customers; making up 51% of the fixed-line NBN market. Around 636,000 of those connections are for fixed-voice and data bundle and 52,000 are data only connections.
Bear in mind, Telstra has started migrating its copper network users onto the NBN so not all of those connections are from new customers. According to the financial results, Telstra added 90,000 fixed data retail customers in the second half of 2016.
As of December 31, 2016, there were 1.6 million active users on the NBN network.
"Telstra has performed well in a highly competitive market, gaining subscriber numbers in mobiles, retail fixed plans and market share in NBN despite increased competition," the company said in its financial report.
While Telstra has accumulated a lot of NBN customers, growth in competition in the market has driven down the revenue it makes per connection. Average revenue per user (ARPU) for fixed-data services, including NBN services, has been driven down as competition heats up.
Earnings before interest, tax, depreciation and amortisation (EBITDA) margins for fixed-line services are also down:
"Fixed voice and fixed data EBITDA margins declined compared to the prior corresponding period due to the upfront costs in connecting our NBN customers in addition to growing ongoing network payments to NBN Co."
Telstra is banking on its bundled services and complementary products to attract even more customers to subscribe to its NBN services:
"We are determined to become Australia’s leading provider of consumer and business services on the nbn. We have a clear strategy to differentiate our services based on network quality and unique products and content experiences that are better with Telstra, such as Telstra Air and Telstra TV."
Overall, Telstra's half-year financial results were disappointing. Profits were down by 14.4% to $1.79 billion and revenue declined 3.6% to $12.8 billion.
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