Telstra profit hits $2b, shelves option for infrastructure sale

afr.com:

Telstra boss Vicki Brady says the emergence of artificial intelligence and demand for cloud storage are reasons to keep the telecoms group’s massive infrastructure business after delivering a 13 per cent jump in annual profit to $2.05 billion.

Telstra had been considering selling stakes in its InfraCo Fixed division, which holds digital infrastructure assets such as fibre optic cable, data centres and subsea cables and is valued at around $15 billion.

While the digital infrastructure assets were in high demand, Telstra had decided that it can make more money for investors by keeping them, Ms Brady said on Thursday.

“We see the trends that are happing technology-wise – the shift to the cloud, the rapid AI adoption – all of those things contribute to an optimistic view of long-term growth out of InfraCo Fixed,” Ms Brady said.

The division is also expected to perform well in an era of high inflation because a big chunk of its revenue is linked to the consumer price index, meaning prices can be increased in line with inflation.

This includes prices for contracts with NBN Co, which is paying Telstra to use telecommunications infrastructure over the next two decades.

NBN-related income rose 6 per cent to $987 million over the year, contributing to a 0.5 per cent increase in InfraCo Fixed’s earnings to $1.6 billion, up 0.5 per cent on a year earlier.

Keeping InfraCo Fixed also gives Telstra options to further develop the business, such as building more intercity fibre networks, Ms Brady said. “It still gives us the flexibility to explore operating and financial infrastructure partnerships.”

The company sold a 49 per cent stake in mobile towers business Amplitel to a Future Fund-led consortium of superannuation investors for