CEO of Australia’s largest telco weighs in on profit decline

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Australia’s largest telecom company Telstra will soon be ready to give customers the next-generation of ultra-high speed mobile internet, known as 5G, its CEO said on Thursday.

Mobile is the « engine room » of Telstra’s business and it will be a critical part of the future, Andrew Penn told CNBC’s « Street Signs. »

« We have had more than 200 sites rolled out on 5G now, » he said. « We’ll be one of the first global operators to actually put 5G in the hands of our customers in the coming months when handsets are available. »

Penn’s remarks came after Telstra released its half year results for financial year 2019 on Thursday morning.

Net profit after tax was down 27.4 percent on-year to 1.2 billion Australian dollars (approximately $854 million) in line with expectations. The company said its financial results were affected by a partially-completed fiber network, which is owned by the government. Essentially, Telstra has to pay before it can connect to that network to provide broadband internet to its customers.

« We have a structural change in the industry where, essentially, a significant proportion of our business is being aggressively transferred to this new entity, » Penn said, adding that it « basically takes away about a third-to-half of our earnings in a lot of our activity. »

While 5G is predicted to bring major changes to how people and companies use the internet, there have been growing security concerns over a major name in the tech space — Huawei.

The Chinese telecommunication giant builds the infrastructure needed for companies to bring 5G internet to their users. Australia banned Huawei last year from selling 5G equipment in the country. That followed after the U.S. stepped up pressure on the Chinese firm over intellectual property theft and potential sanctions violation — Huawei equipment have been banned for certain uses in the U.S. for years but reports suggest there could be an even more extensive crackdown coming.

Telstra competitor TPG said earlier this year the Huawei ban forced the company to abandon its 5G plans.

For his part, Penn said Telstra does not have any Huawei equipment on its network across Australia.

« From our perspective, it’s really a matter for the government, and the national security agencies, to make whatever decisions they need to make, » he said.

« Ultimately, we will comply with whatever policies they put in place. It’s not really helpful for me to comment on those things, » he said, referring to Huawei’s ban in Australia. « Our focus is on continuing to build the best network. »

Source: CNBC

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