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SYDNEY - Telstra has upgraded its earnings guidance for this year, as its transformation strategy to expand and upgrade its networks and systems begins to deliver results.
Chief executive Sol Trujillo now sees earnings before interest and tax (EBIT) growing by between five and seven per cent in 2007/08, up from a previous forecast of three to five per cent.
Excluding a A$100 million ($122 million) dividend from its 50 per cent owned pay television operator Foxtel, EBIT would grow up by four to six per cent.
Mr Trujillo also projected revenue and earnings before interest, tax, depreciation and amortisation growth to 2010 to lift by between 2.5 per cent and three per cent a year, compared to earlier guidance of two to 2.5 per cent.
Speaking at an investor briefing in Sydney today, Mr Trujillo said Australia's biggest telco was stemming a long run decline in its traditional fixed line, or PSTN, business.
It had added 33,000 retail customers to the copper telephone line service in the September quarter.
"Telstra is winning on the front line," Mr Trujillo said.
"We are earning new revenues as NextG mobile broadband changes the way customers use their mobiles.
"We are winning market share and revenue-per-user in broadband, and we are bucking the worldwide decline in traditional products."
Mr Trujillo also announced that Telstra had beaten by two months its deadline to switch-on a new IT system, that will make it easier for customers to do business with the company.
"We have again beaten our own transformation timetable," he said.
"Two years into our transformation, consumers have restored Telstra's position as market leader.
"Consumers are recognising we offer better products, innovation, service and value.
"Because of that complete experience, consumers are choosing Telstra over the competition, and they are doing it in growing numbers."
The upgraded IT system - known as IT Release 1 - was switched on last weekend.
It gives call centre staff a single view of the customer, reducing repeat activities, increasing automation and enabling a single bill for most products.
A second wave of IT improvements are on track for release at the end of 2008.
Mr Trujillo said Telstra was succeeding despite having to operative in one of the most "punitive" regulatory markets for telecos in the world.
"We are winning on the front line despite the worlds most punitive and intrusive regulatory environment which has produced the developed worlds lowest wholesale prices, highest input costs and declining investment from other companies," he said.
"Despite the challenges we are winning because of operational superiority."
Telstra was also reducing the capital spend on its transformation, since it peaked in 2006/07.
"The major expenses of the transformation including the NextGT and Next IP networks are largely behind us, and our capital expenditure to sales ratio will decline to 10 to 12 per cent by 2010," he said.
- AAP
