Telstra’s Penn says new $1.6b spend good for earnings

Telstra will spend an extra $1.4 billion to $1.6 billion in the next five years on 2 major infrastructure projects.The other is building and managing the ground infrastructure and fibre network in Australia for satellite communications group Viasat as part of a 16.5 year contract.

“It is all going to drive demand and structurally increase demand for bandwidth, coverage, capacity, speed, low latency. This is the world we are looking excitedly towards.” Telstra says it expects the project to reach annual earnings before interest, tax, depreciation and amortisation of about $200 million by 2026 and have a payback period of about nine years.Mr Penn hosed down analysts’ concerns that the additional fibre roll-out was just to keep pace with competitors, stressing that it would deliver long-term earnings and would not affect the group’s capital management plan.

Telstra said it was holding talks with potential customers, including so-called hyperscalers such as Amazon, Google and other major communications users, about their needs for the new network.

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