Telstra Corp. Outperforms Rivals, Beats Analyst Expectations in Profit Growth

Australia's largest phone company, Telstra Corp,, beat analyst expectations with a surge in profits due to the increasing number of users for its 4G network. The growth boosted Telstra's share in the mobile phone market to almost 50 per cent.

Telstra's net income rose to 12 per cent at $AU3.8 billion in the fiscal year ended June 30 compared to $AU3.41 billion 12 months earlier. The Melbourne-based company released its latest financial data in a statement on Aug 8. The posted profit of Telstra can be compared to three analyst estimates compiled by Bloomberg at an average of $3.7 billion.

Telstra Corp. has spent $AU1.3 billion in upgrading its mobile network and $AU2.9 billion on mobile devices, including iPhones from Apple Inc. The largest mobile company in Australia also invested $AU1.2 billion worth of new spectrum to meet increasing demand for wireless services.

Telstra CEO David Thodey has switched to high-speed 4G service in 2011 to beat competitors Vodafine Hutchison Australia Pty. and Singapore Telecommunications Ltd.

Market strategist for IG Markets Evan Lucas said Telstra is getting into people's hands, on iPads and iPhones. He speculated that Telstra might make the winning bet where Internet consumption was concerned.

The recent surge in profits has brought Telstra's shares up by 1.6 per cent to $AU5.09 by 10:47 am in Sydney. This was the highest gain since May 22 which makes 2013's total increase to 16 per cent.

Telstra's Chief Financial Officer Andy Penn said the company is making an investment in consumers to increase customer base and ultimately improve customer service.

Telstra's mobile users in Australia increased by 1.3 million to have a total of 15.1 million subscribers. The figure is equivalent to 65 per cent of the total population in Australia. The former state-owned company has continued to dominate the mobile growth in Australia for adding 2.9 million people to its customer base in two years.

Deutsche Bank AG analyst Vikas Gour in Sydney said Telstra has the first-mover advantage. A superior network will help the company further widen the gap with its rivals and increase market share in a slowing mobile market.